Full Text of Goertek Inc. Annual Report 2023
Goertek Inc.
Annual Report 2023
March 2024
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Full Text of Goertek Inc. Annual Report 2023
Annual Report 2023
Section Ⅰ Important Notes, Contents and Interpretations
The Board of Directors, the Supervisory Board, directors, supervisors and senior management
of the Company guarantee that the information presented in this report shall be together be
wholly liable for the truthfulness, accuracy and completeness of its contents and free from false
statement, misrepresentations and material omissions, and will undertake individual and joint
legal liabilities.
Jiang Bin, the person in charge of the Company, and Li Yongzhi, the person in charge of
accounting and the accounting department (accounting supervisor) guarantee that the financial
report in this annual report is authentic, accurate and complete. All directors have attended the
board meeting to review the annual report.
The future plans and some forward-looking statements mentioned herein are planned matters
which shall not constitute a substantial commitment of the Company to investors. Both
investors and relevant persons should understand the differences among plan, forecast and
commitment. Please pay attention to investment risks.
The Company faces the risks in market, operation and management. Investors are kindly
reminded to pay attention to possible investment risks. For details, refer to "Section III
Management Discussion and Analysis, XI Outlook for the Future Development of the
Company" in this report.
The profit distribution proposal considered and approved by the Board of Directors is as follows:
based on the total share capital registered on the record date of equity distribution minus the
repurchased shares in the Company's specific securities repurchase account, the Company will
distribute cash dividend of RMB 1.00 (tax inclusive) for per 10 shares to all the shareholders.
There will be no bonus shares or conversion of capital surplus into share capital.
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Full Text of Goertek Inc. Annual Report 2023
Contents
Section Ⅰ Important Notes, Contents and Interpretations ............................................................ 2
Section Ⅱ Company Information and Financial Highlights .......................................................... 7
Section III Management Discussion and Analysis ............................................................................ 11
Section IV Corporate Governance ........................................................................................................ 41
Section V Environmental and Social Responsibilities ................................................................... 69
Section VI Important Matters ................................................................................................................ 72
Section VII Share Changes and Shareholder Information .............................................................. 83
Section VIII Preference Shares .................................................................................................................. 91
Section IX Bonds ......................................................................................................................................... 92
Section X Financial Report .................................................................................................................... 93
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Full Text of Goertek Inc. Annual Report 2023
Directory of Reference Files
(1) Financial statements with signatures and seals of the legal representative, the person in charge of
accounting and the person in charge of accounting department (accounting supervisor);
(2) The originals of 2023 annual report signed by the legal representative of the Company;
(3) The originals of the auditor's report with the seal of accounting firm and the signature and seal
of the certified public accountants;
(4) The originals of all company documents and announcements publicly disclosed in media
designated by China Securities Regulatory Commission (CSRC) during the reporting period.
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Full Text of Goertek Inc. Annual Report 2023
Interpretations
Terms Refers to Content of interpretation
Company, the Company,
Refers to Goertek Inc.
Goertek Inc.
Goertek Group Refers to Goertek Group Co., Ltd., Controlling shareholder of the Company
Goertek Microelectronics Refers to Goertek Microelectronics Inc. controlled subsidiary of the Company
Goertek Optical Refers to Goertek Optical Technology Co., Ltd, controlled subsidiary of the Company
ODM Refers to Original Design and Manufacturing
JDM Refers to Joint Design and Manufacturing
The micro electro-acoustic components that transform electrical signal into acoustic
signal, generate driving force through the magnetic line cutting of voice coil in
magnetic field, to drive the diaphragm vibration, which then pushes the air for
Micro speaker Refers to
sounding. Compared with the micro receiver, it's characterized by higher power,
wide frequency response and high fidelity, which is generally used for playing the
sound.
Based on micron/nano technology, Micro electro mechanical system (MEMS) is a
technology developed for designing, processing, manufacturing, measuring and
controlling micron/nano materials. MEMS can integrate mechanical components,
MEMS Refers to
optical system and electric control system of driving components into a whole unit
of microsystem, featured with miniaturization, intelligence, multi-function, high
integration and being suitable for mass production.
The acoustic component composed of one or several micro speakers and other
Speaker module Refers to electronic devices, which are assembled together through an injection molded
housing.
A portable device that can be worn or carried directly, or integrated into the user's
Smart wearable devices Refers to
clothes or accessories.
A computer simulation system that can generate a simulation environment, where
Virtual Reality/VR Refers to
users can experience virtual situations.
A new visual environment that can integrate the real and virtual situations, where
Mixed reality/MR Refers to
users, the real world, and virtual digital objects can coexist and interact in real time.
A technology that skillfully integrates virtual information with the real world. By
making extensive use of multimedia, 3D modeling, real-time tracking and
registration, intelligent interaction, sensing and other technical means, it applies the
Augmented Reality/AR Refers to
computer-generated text, images, 3D models, music, video and other virtual
information to the real world after simulation. These two kinds of information
complement each other to achieve "augmentation" of the real world.
The new types of smart wireless earphones represented by TWS (True Wireless
Stereo) earphones connect the left and right earphones with smart phones or other
Smart wireless earphones Refers to terminal devices through Bluetooth technology to form an independent stereo
system, which realizes touch control, voice control, body information collection and
other functions by adding various sensors.
Also known as SiP (System in Package) packaging module at the system level, it
integrates multiple chips and passive components into the same package through
advanced packaging technologies such as 3D packaging, to form a module with
Microsystem module Refers to
whole or main functions of an electronic system, so as to realize the optimal
combination of performance, volume, weight and other indicators. It is a versatile
next-generation microelectronics technology.
A detection device that is capable of feeling the measured information, and able to
Sensor Refers to
transform the information into electrical signals or other required forms of
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information for output based on certain rules, in order to meet the requirements of
information transmission, processing, storage, display, recording and control.
Optical components based on micro-structured materials. They offer significant
Micro-nano optical
Refers to advantages over traditional optical components in terms of making optical systems
components
lighter, more integrated, and more capable of using intelligent sensing technology.
The process of obtaining three-dimensional information about an object by using
light, sound, electromagnetism, or other means to contact the surface of the object.
3D sensing Refers to
The measured information is then converted into an electrical signal or other desired
form of information output according to a certain rule.
Goertek Production System. It is a comprehensive operation system that integrates
automation, information communication, artificial intelligence, green and low-
GPS Refers to carbon technologies. It aims to promote manufacturing transformation and
upgrading, optimize the management and cooperation mode of the whole chain, and
improve the core competitiveness of the company and the happiness of employees.
The Company Law Refers to Company Law of the People's Republic of China
The Securities Law Refers to Securities Law of the People's Republic of China
Articles of Association Refers to Articles of Association of Goertek Inc.
CSRC Refers to China Securities Regulatory Commission
RMB, RMB 10,000, RMB
Refers to yuan (RMB), ten thousand yuan (RMB), hundred million yuan (RMB)
100,000,000
Reporting period Refers to January 1, 2023 to December 31, 2023
Notes:
1.In this report, any difference between the sum of some amounts and the sum of detailed items is due to rounding.
2.This report has been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the
two versions, the Chinese version shall prevail.
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Full Text of Goertek Inc. Annual Report 2023
Section Ⅱ Company Information and Financial Highlights
I. Company Information
Stock abbreviation Goertek Inc. Stock code 002241
The stock exchange where stocks
Shenzhen Stock Exchange
are listed
Name of the Company in Chinese 歌尔股份有限公司
Abbreviation of the Company in
歌尔股份
Chinese
Name of the Company in English
Goertek Inc.
(if any)
Abbreviation of the Company in
Goertek
English (if any)
Legal representative of the
Jiang Bin
Company
Registered address 268 Dongfang Road, High-tech Industrial Development District, Weifang
Postal code of registered address 261031
History of changes in registered
No change
address of the Company
Business address 268 Dongfang Road, High-tech Industrial Development District, Weifang
Postal code of business address 261031
Company website http://www.goertek.com
E-mail ir@goertek.com
II. Contacts and Contact Information
Board Secretary Securities Affairs Representative
Name Xu Dapeng Xu Yanqing
268 Dongfang Road, High-tech Industrial 268 Dongfang Road, High-tech Industrial
Contact address
Development District, Weifang Development District, Weifang
Tel. 0536-3055688 0536-3055688
Fax 0536-3056777 0536-3056777
E-mail ir@goertek.com ir@goertek.com
III. Media for Information Disclosure and Place of the Report
Website of the stock exchange for release of the Annual Report Shenzhen Stock Exchange (http://www.szse.cn)
Securities Times, China Securities Journal, Shanghai Securities
Name and website of the media for release of the Annual Report
News, Securities Daily, CNINFO (http://www.cninfo.com.cn)
Place where the Annual Report is available for inspection Office of Board of Directors of the Company
IV. Changes in Registration
Unified Social Credit Code 91370700729253432M
The changes in main business since the Company was listed (if
No change
any)
Changes of controlling shareholders of the Company (if any) No change
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V. Other Relevant Information
Accounting firm engaged by the Company
Name of the accounting firm Zhongxi CPAs (Special General Partnership)
Room 1101, No. 11, Chongwenmenwai Street, Dongcheng
Business address of the accounting firm
District, Beijing
Names of accountants signing the report Du Yeqin, Zhang Shuli
The sponsor institution engaged by the Company to perform continuous supervision during the reporting period
Applicable Not applicable
The financial advisor engaged by the Company to perform continuous supervision during the reporting period
Applicable Not applicable
Ⅵ. Key Accounting Data and Financial Indicators
Whether the Company performed a retrospective adjustment or restatement of previous accounting data
Yes No
2023 2022 Year-on-year change 2021
Revenue (RMB) 98,573,902,273.14 104,894,324,162.26 -6.03% 78,221,418,618.02
Net profit attributable to
shareholders of the Company 1,088,076,730.88 1,749,181,131.83 -37.80% 4,274,702,999.38
(RMB)
Net profit attributable to
shareholders of the Company
859,926,918.87 1,627,378,630.73 -47.16% 3,832,421,177.27
excluding non-recurring
gains and losses (RMB)
Net cash flow from operating
8,151,888,243.38 8,317,113,364.68 -1.99% 8,598,475,527.88
activities (RMB)
Basic earnings per share
0.32 0.52 -38.46% 1.29
(RMB)
Diluted earnings per share
0.32 0.52 -38.46% 1.28
(RMB)
Weighted average return on
3.59% 6.17% -2.58% 17.61%
net assets
End of 2023 End of 2022 Year-on-year change End of 2021
Total assets (RMB) 73,744,409,441.15 77,176,355,467.91 -4.45% 61,079,051,133.27
Net assets attributable to
shareholders of the Company 30,810,590,551.00 29,491,882,199.49 4.47% 27,327,747,993.97
(RMB)
Indicate whether the lower of the net profit before and after non-recurring gains and losses was negative for the last three accounting
years, or the latest auditor's report indicated that there was uncertainty about the Company's ability to continue as a going concern.
Yes No
Indicate whether the lower of the net profit before and after non-recurring gains and losses was negative.
Yes No
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Ⅶ. Differences in accounting data between domestic and overseas accounting standards
1. Differences in net profits and net assets in the financial reports disclosed according to International
Financial Reporting Standards and China Accounting Standards
Applicable Not applicable
During the reporting period, there is no difference in net profits and net assets in the financial reports disclosed pursuant to
International Financial Reporting Standards and China Accounting Standards.
2. Differences in net profits and net assets in the financial reports disclosed according to overseas
accounting standards and China Accounting Standards
Applicable Not applicable
During the reporting period, there is no difference in net profits and net assets in the financial reports disclosed pursuant to foreign
accounting standards and China Accounting Standards.
Ⅷ. Key Quarterly Financial Indicators
Unit: RMB
The first quarter The second quarter The third quarter The fourth quarter
Revenue 24,122,252,634.31 21,050,325,234.60 28,775,249,801.07 24,626,074,603.16
Net profit attributable to
106,175,127.83 315,621,829.78 470,337,212.13 195,942,561.14
shareholders of the Company
Net profit attributable to
shareholders of the Company
15,112,875.19 425,863,646.15 345,293,902.06 73,656,495.47
excluding non-recurring gains and
losses (RMB)
Net cash flow from operating
134,286,338.03 1,967,742,875.47 1,299,068,883.40 4,750,790,146.48
activities
Whether there is significant difference between the above financial indicators and that of what disclosed in the quarterly reports and
semi-annual reports
Yes No
Ⅸ. Non-recurring Gains and Losses
Applicable Not applicable
Unit: RMB
Item 2023 2022 2021 Explanation
Gains and losses on disposal of non-
Mainly loss on
current assets (including the write-off
-123,882,680.16 122,922,237.61 -122,148,708.58 retirement of fixed
portion of the provision for asset
assets
impairment)
Government grants included in the
current gains and losses (except for
Mainly special
those that are closely related to the
funds for enterprise
normal business operations of the
innovation and
Company, comply with national policy 331,548,590.64 351,383,799.43 464,119,437.91
development and
regulations, are enjoyed according to
other government
established standards, and have a
grants
continuous impact on the Company's
gains and losses)
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Item 2023 2022 2021 Explanation
Gains and losses from changes in the
fair value of financial assets and
liabilities, and from the disposal of
financial assets and liabilities, held by
-26,138,756.91 -367,080,970.87 185,179,920.90
non-financial enterprises, except for
effective hedging businesses related to
the normal operating business of the
Company.
Other non-operating income and
expenditures other than those 28,631,472.04 15,710,102.76 13,554,671.71
mentioned above
Mainly tax benefits
and investment
Other profit and loss items that meet
income from
the definition of non-recurring profit 66,527,741.91 42,288,231.23 2,603,363.20
certificates of
and loss
deposits and other
products
Less: Impact of income tax 35,531,401.22 26,114,589.64 84,270,186.15
Impact of minority interests (after
13,005,154.29 17,306,309.42 16,756,676.88
tax)
Total 228,149,812.01 121,802,501.10 442,281,822.11 --
Details of other profit and loss items that meet the definition of non-recurring profit and loss：
Applicable Not applicable
Mainly tax benefits and investment income from certificates of deposits and other products
Description of defining the non-recurring profit and loss items, which are listed in Explanatory Announcement No. 1 on Information
Disclosure for Companies with Public Offerings of Securities as recurring profit and loss
Applicable Not applicable
The Company did not classify any item of the non-recurring profit and loss items listed in the Explanatory Announcement No. 1 on
Information Disclosure for Companies with Public Offerings of Securities as recurring profit and loss in the reporting period.
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Section III Management Discussion and Analysis
Ⅰ. The situation of the industry during the reporting period
During the reporting period, the Company's main business is categorized into the industry of the manufacturing of computer,
communication, and other electronic devices, and is divided into three product segments: precision component, smart audio device and
smart hardware. The Company mainly focuses in consumer electronics and automotive electronics industries, and provides a wide
range of products including acoustics, optics, microelectronics and structural precision components, as well as smart hardware products
such as virtual reality (VR)/mixed reality (MR)/augmented reality (AR) products, TWS smart earphones, smart wearable devices,
gaming console and accessories, and smart home products. The Company serves the global leading clients in the technology and
consumer electronics industry with vertically integrated product solutions of precision components and smart hardware, as well as
R&D and manufacturing services.
In the mobile era, where smartphone was considered as a core hardware, a large number of well-known enterprises in technology and
consumer electronics industry had emerged worldwide thru the integration of hardware devices, software content and innovative
applications, and drove the whole industry to achieve significant growth and development through a long period of time. In recent
years, the pace of innovation on smartphone hardware and software, as well as the growth of smartphone market size, were both slowed
down. The consumer electronics industry gradually stepped into the post-mobile era, and new kinds of smart hardware products have
become the primary growth driver of hardware market in the industry.
The integration of smart hardware and advanced technologies as AI, 5G, intelligent sensing and interaction, software algorithms and
others has created a large amount of new application scenarios and market demands, and further promoted the development of smart
hardware products. In recent years, we have seen remarkable development in AI in particular. The large language models (LLMs) had
made significant strides in 2023 and brought unprecedented impact to many fields including science, technology, art, education, and
entertainment. The development of AI is expected to create more software applications and use cases for smart hardware products,
which will help the development of these products in long term.
According to IDC, due to many unfavorable factors such as the weak global economic recovery, intensified geopolitical conflicts, and
inadequate demand from end-users, the global smartphone shipments fell to 1.17 billion units in 2023 (-3.2% YoY). The slowdown of
the innovation in both smartphone hardware technology and software application scenarios also impacted the market demand of related
precision components.
In 2023, the market performance of smart hardware products was varied. According to Canalys, global shipments of smart wearable
products reached about 186 million units (+2% YoY). Global shipments of TWS earphones reached about 295 million units (+2.4%
YoY). The market for smart wearable products and TWS earphones continued to grow steadily, despite weak consumer demand. Along
with the development of technologies such as intelligent interaction and health monitoring, and the expansion of application scenarios,
the market size of these products is expected to further grow in the future.
VR, MR, and AR products remained the most popular directions in the consumer electronics industry in 2023. According to IDC,
global shipments of VR, MR, and AR products totaled approximately 6.7 million units (-23.5% YoY). The VR and MR industries saw
a decline in shipments in the short term, due to insufficient consumer demand and inadequate software content. However, there were
many exciting things happened in the industry. On one hand, with the advancement of technologies like image sensing and spatial
computing, mainstream VR products commonly integrated hardware and software content to support MR applications. The boundaries
between VR and MR are further blurred, and MR products have become the mainstream of the market. On the other hand, many leading
consumer electronics companies released new MR products or announced plans to develop Metaverse related products in 2023, which
shows that the whole industry considers it as an important product direction and continuously promotes the development. Meanwhile,
the market for AR products continues to grow rapidly and the hardware technologies are maturing. The potential integration of AR and
AI has attracted the attention and investment of industry-leading companies. The development of VR, MR, and AR products will also
further promote the development of related technologies and components, such as micro displays, optical components, sensors, etc.
The government attaches great importance to the development of the Metaverse industry. In September 2023, the Ministry of Industry
and Information Technology (MIIT) and four other ministries jointly issued the "Three-Year Action Plan for the Innovative
Development of the Metaverse Industry (2023-2025)". The plan further clarifies the principles, goals, key tasks, and supporting
measures for the development of Metaverse industry, which is expected to continuously promote the healthy development of the
industry.
The Company will seize the new industrial opportunities in the post-mobile era, such as new smart hardware products, AI, and
Metaverse. The Company will continuously consolidate the core competitiveness based on existing advantages, expand the business
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of new smart hardware products and related precision components, and actively engage in new product directions to support the long-
term and healthy development of the company's business.
From the perspective of the industry competition, the global technology and consumer electronics industries still show a centralized
trend. Top enterprises with strong competitiveness and brand awareness demonstrate competitive advantages by possessing a large
amount of technologies, talents, funds, brands and industrial ecosystem resources, keep investing in the field of smart hardware and
AI, and continuously lead the product and technology innovation in the industry.
From the perspective of industry supply chain, on one hand, China still has advantages in terms of political/economic environment,
infrastructure, industrial completeness, talent resources, and other aspects. The overall competitiveness of electronic manufacturing
enterprises in China is improving, and continuously fulfill the demands of the global supply chain. On the other hand, considering the
complicated international political and economic environment, these enterprises need to prudently tackle the challenges of setting up a
global supply chain layout.
II. The Company's main business during the reporting period
The Company serves the global leading clients in the technology and consumer electronics industry with vertically integrated product
solutions of precision components and smart hardware, as well as R&D and manufacturing services.
The Company's main business divides into three product segments: precision component, smart audio device and smart hardware. The
precision components business focuses on acoustics, optics, microelectronics, structural components, and other precision components.
The products include micro speakers/receivers, speaker modules, haptic components (actuators), wireless charging components,
antenna, MEMS sensors, microsystem modules, VR/MR optical components and modules, AR optical components, micro/nano optical
components, 3D structured light modules, AR optical engine modules, AR HUD modules, precision structural components, etc. The
above products are widely used in a variety of consumer electronics, including smartphones, tablets, smart wireless earphones, VR,
MR, AR, smart wearables, smart homes, and automotive electronics. Smart audio device business focuses on providing products related
to audio, voice interaction, AI, and other technologies, such as wireless earphones (TWS), wired/wireless earphones, smart speakers,
etc. Smart hardware business focuses on providing products related to entertainment, health and home security. The main products
include VR, MR, AR, smart wearable products, gaming consoles and accessories, smart home products, etc. The Company continued
to explore automotive electronics business opportunities during the reporting period and made progress in the fields of car sensors,
optical components and modules of AR HUD, etc.
The Company has innovative competitive advantages in the fields of acoustics, optics, MEMS microelectronics and precision
manufacturing, and owns a great amount of intellectual property rights in the field of precision components. The Company has
accumulated rich experience in products and projects by cooperating with industry-leading clients in the field of smart audio device
and smart hardware through "ODM", "JDM" and other business modes. During the reporting period, the Company maintained strong,
long-term cooperative relationships with leading clients in the global technology and consumer electronics industry. As a result, the
Company has been highly recognized by global clients for its product solutions and services, and remains the industry-leading
manufacturer in the fields of micro speakers, MEMS microphones, MEMS sensors, VR/MR products, TWS, smart wearable products,
gaming console and accessories, etc.
In the fourth quarter of 2023, the Company acquired 100% of the equity of Uphoton Technology (Shaoxing) Co., Ltd. This acquisition
will further strengthen the Company's position in the fields of micro/nano optical components, projection/display modules, and 3D
sensing technology. It will also effectively improve the Company's comprehensive competitiveness in the field of precision optics and
support the long-term development of the Company's optical business.
During the reporting period, the global economic was in a weak recovery, and many major countries raised the interest rates, which
suppressed the demand of consumer electronics products worldwide. For some smart hardware products, the shipment in the reporting
period was lower than expected, and brought negative impacts to the Company's revenue and profitability. The Company also has
experienced a short-term sales structure change caused by the rapid revenue growth of some lower-margin projects, which impacted
the Company's overall gross margin. Due to the combined effects of the above factors, the Company's revenue and net profit
experienced a decline in the reporting period. However, the Company's core competitiveness and industry position remain strong. The
management and all employees are committed to seize the opportunities of the recovery of the consumer electronics industry and the
development of new smart hardware products, to strive to improve the Company's operating performance in the near future, as well as
to pursuit a long-term, sustainable development of the Company.
During the reporting period, the Company won multiple honors, including being ranked the 4th in the 2023 Top 100 Electronic
Components Enterprises of China, 15th in the 2023 Top 100 Competitive Enterprises in China's Electronics Information Industry, 55th
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in the 2023 Top 500 Private Enterprises in China's Manufacturing Industry, 86th in the 2023 Top 500 Private Enterprises in China, and
held the position of executive member company of China Information Technology Industry Federation.
Ⅲ. Analysis of Core Competitiveness
1. Industry-leading precise and intelligent manufacturing capabilities
In technology and consumer electronics related fields, the Company has been widely recognized for precision manufacturing
capabilities and obtains great reputation. Relying on the core capabilities and long-term experience in the field of precision
manufacturing, the Company has continuously improved the processing accuracy, efficiency and quality of precision components and
smart hardware products. The Company has in-house development capabilities of various core raw materials, and the Company adopted
multiple advanced processes and technologies such as ultra-high-precision mold, high-precision metal/non-metal processing, ultrasonic
technology and laser technology, to build industry-leading precision manufacturing capabilities in the production of precision optical
components, MEMS sensors, microsystem modules and precision structural parts, thus ensuring the delivery of the products with high
precision, high efficiency and high quality.
The Company, based on the capacities of advanced equipment development and flexible automation production, actively explores the
intelligent manufacturing mode for upgrading and develops the Goertek Production System (GPS). In the fields of automation, machine
vision and AI related to intelligent manufacturing, the Company has built a future-oriented core capability of intelligent manufacturing
by continuing investing in independent R&D, introducing global advanced technologies, core equipment and best practice experience
for system integration, thus improving the manufacturing in all aspects through the application of information, automation, artificial
intelligence and other technologies. The Company promotes the transformation of its manufacturing to a more digitalized, connected,
intelligent, and service-oriented model, and to build the core capabilities of future-oriented intelligent manufacturing.
2. Multi-technologies integration platform and strong team of R&D personnel
The Company has established a product R&D and manufacturing platform integrating materials, structures, electronic circuits, software
algorithms, wireless communication, advanced technology, testing, automation and other technologies. Through cross-domain
technology integration, the Company provides clients with advanced and systematic solutions for precision components and smart
hardware products. The Company attaches great importance to the integration and cultivation of outstanding talents in the fields of
acoustics, optics, microelectronics, wireless communication, precision manufacturing, automation, and other sectors around the world.
The Company has set up a team of technical personnel with profound technical strength and rich experience in product projects, and
has made a long-term cooperation with many well-known universities and scientific research institutions, such as Tsinghua University,
Peking University, Shandong University, Southeast University, University of Science and Technology of China, Xiamen University,
and Changchun University of Science and Technology, which forms an open and comprehensive technology R&D platform in support
of continuous innovation and R&D of technologies and products.
During the reporting period, the Company applied for 3,003 patents, including 2,249 invention patents. A total of 2,185 patents has
been granted, including 1,394 invention patents. As of December 31, 2023, the Company has totally applied for 32,209 patents,
including 4,031 foreign patent applications and 17,896 invention patents applications; a total of 19,905 patents have been granted,
including 6,809 invention patents.
3. Continuous strategic innovation and transformation, and stable high-value client resources
Facing the complex macroeconomic situation of domestic and overseas, the management of the Company actively carries out strategical
innovation and transformation. While continuing to consolidate the core competitive advantages in conventional business, the Company
firmly grasps the innovation opportunities of next-generation smart hardware products in the technology and consumer electronics
industry. Relying on the high-value client resources and good client relationships worldwide, the Company, oriented by the market and
technology, continues to explore new business growth opportunities in the fields of consumer electronics and automotive electronics.
The Company optimizes the allocation of strategical resource, supports strategical product development, continues strengthening and
further utilizing the client resource advantages by closely following the world-class clients, in an effort to transform the needs of high-
value clients into an inexhaustible driving force for the Company's sustainable development.
4. Excellent core management team
Although the Company experiences a rapid and sound development, the core management team keeps a steady and efficient style as
always. Facing the challenges and demands of smart hardware products in the post mobile era such as rapid development, high quality,
high precision manufacturing, short delivery cycle and complex client certification process, the core management team promptly
responses to the market and makes changes and innovations continuously, to keep and enhance the Company's capabilities of strategic
management, operation, R&D, precision and intelligent manufacturing. The Company attaches importance to and promotes the
internationalization, specialization and rejuvenation of its core management team, and actively brings in senior management talents
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and professionals from many international leading enterprises. At the same time, the Company has strengthened the echelon of its
talent team, more and more young talents grow up into the Company's core management team through training and practice. The
Company builds a management team with both experience and vitality that continues to promote the Company's stable and fast
development in the future.
IV. Analysis of Main Business
1. Overview
In 2023, the global economic recovery was weak and the international environment was unusually complex. China's economy also
faced many challenges and difficulties including the insufficient consumer demand. Despite the severe and complex environment,
China withstood external pressure and overcame internal difficulties, and successfully achieve the main economic and social
development goals.
In the reporting period, facing the challenges of a sluggish consumer electronics industry, weak market demand and slower-than-
expected development of the smart hardware products, the management and all employees had worked diligently and successfully
completed the main business goals in business expansion, project delivery and operation improvement. The Company continued to
uphold its product strategy of "Precision Components + Smart Hardware", and to serve leading clients in the global technology and
consumer electronics industries. The Company continued to promote the business development of precision components such as
acoustics, optics, microelectronics, and structural parts, as well as smart hardware businesses including VR, MR, AR, smart wireless
earphones, smart wearable devices, and smart home products. Meanwhile, the Company had also made meaningful progress in the
automotive electronics business. In the field of smart manufacturing, the Company was actively engaged in the development of the
Goertek Production System (GPS), a future-oriented intelligent manufacturing model with Goertek characteristics, which will help the
Company to further consolidate its core competitiveness as a manufacturing enterprise.
During the reporting period, the Company's management team took effective measures to overcome the negative impact of the business
fluctuations of a particular product project in 2022, and took it as an opportunity to continuously improve its client-oriented awareness
and client service capabilities. These efforts above have achieved positive results in 2023. In terms of internal management, the
Company continued to optimize the organization structure, to improve the management of operation and to keep a highly effective
internal decision-making process. At the same time, the Company actively explored the application of big data and AI technology in
internal operation, continuously improved the level of digitalization and informatization, to establish a solid management and operation
foundation for long-term development in the future.
During the reporting period, due to weak demand in the consumer electronics industry and a decline in the market for some smart
hardware products such as VR, the Company's revenue decreased slightly compared to last year, and business profitability was also
affected to a certain extent. Additionally, the Company experienced a short-term change in sales structure caused by rapid sales growth
in some lower-margin projects, impacting the Company's overall gross margin. Despite these short-term performance challenges, the
Company's core competitiveness and industry position remained strong. Management and all employees are committed to seizing the
opportunities presented by the recovery of the consumer electronics industry and the development of new smart hardware products,
striving to improve the Company's operating performance in the near future, and pursuing long-term, sustainable development.
During the reporting period, the Company achieved revenue of RMB 98,573.9023 million, a 6.03% YoY decline. The Company
achieved a net profit attributable to shareholders of listed companies of RMB 1,088.0767 million, a 37.80% YoY decline. The operating
cost of the Company was RMB 89,753.0642 million, a 3.73% YoY decline.
During the reporting period, the total amount of the Company's selling expenses, administrative expenses, R&D expenses, and financial
expenses was RMB 7,798.7093 million, a 5.11% YoY decline.
During the reporting period, the Company invested RMB 4,572.8554 million in R&D, accounting for 4.64% of revenue and 14.50%
of the latest audited net assets of the Company.
During the reporting period, the net cash flow from operating activities of the Company was RMB 8,151.8882 million, a 1.99% YoY
decline.
2. Revenue and cost
(1) Composition of revenue
Unit: RMB
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Full Text of Goertek Inc. Annual Report 2023
2023 2022
Year-on-year
Proportion to
Amount Proportion to revenue Amount change
revenue
Total of revenue 98,573,902,273.14 100% 104,894,324,162.26 100% -6.03%
Classified by industry
Electronic
95,885,691,189.51 97.27% 102,966,939,788.80 98.16% -6.88%
components
Other business
2,688,211,083.63 2.73% 1,927,384,373.46 1.84% 39.47%
income
Classified by product
Precision components 12,991,833,787.27 13.18% 14,003,616,502.68 13.35% -7.23%
Smart audio device 24,185,269,052.84 24.54% 25,880,868,282.31 24.67% -6.55%
Smart hardware 58,708,588,349.40 59.56% 63,082,455,003.81 60.14% -6.93%
Other business
2,688,211,083.63 2.73% 1,927,384,373.46 1.84% 39.47%
income
Classified by region
Domestic 7,180,017,243.40 7.28% 9,182,257,334.82 8.75% -21.81%
Overseas 91,393,885,029.74 92.72% 95,712,066,827.44 91.25% -4.51%
Classified by sales mode
Direct selling 98,164,328,961.68 99.58% 104,414,898,362.49 99.54% -5.99%
Distribution 409,573,311.46 0.42% 479,425,799.77 0.46% -14.57%
(2) Industries, products, regions and sales modes accounting for more than 10% of the Company's operating revenue or
operating profit
Applicable Not applicable
Unit: RMB
Gross YoY change (%) YoY change YoY change
Operating revenue Operating cost profit of operating (%) of (%) of gross
margin revenue operating cost profit margin
Classified by industry
Electronic
95,885,691,189.51 87,326,051,000.75 8.93% -6.88% -4.57% -2.20%
components
Classified by product
Precision
12,991,833,787.27 10,329,768,695.82 20.49% -7.23% -6.39% -0.71%
components
Smart audio
24,185,269,052.84 22,555,549,272.05 6.74% -6.55% -7.63% 1.09%
device
Smart hardware 58,708,588,349.40 54,440,733,032.88 7.27% -6.93% -2.88% -3.87%
Classified by region
Domestic 5,837,928,345.91 5,379,650,970.76 7.85% -23.88% -19.86% -4.62%
Overseas 90,047,762,843.60 81,946,400,029.99 9.00% -5.51% -3.36% -2.02%
Classified by sales mode
Direct selling 95,480,495,737.95 86,972,923,164.72 8.91% -6.84% -4.53% -2.20%
Distribution 405,195,451.56 353,127,836.03 12.85% -15.06% -13.56% -1.51%
In case the statistical caliber of the Company's main business data was adjusted in the reporting period, the Company's main business
data for the preceding period adjusted according to the caliber at the end of the period shall be indicated
Applicable Not applicable
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(3) Whether the Company's goods sales income is greater than the services income
Yes No
Classification of Year-on-year
Item Unit 2023 2022
industry change
Sales volume Ten thousand PCS 428,520.45 453,825.95 -5.58%
Electronic
Output volume Ten thousand PCS 425,166.92 461,666.20 -7.91%
components industry
Inventory volume Ten thousand PCS 38,522.81 41,876.34 -8.01%
Reasons for YoY change over 30% in the above data
Applicable Not applicable
(4) Fulfillment of significant sales and procurement contracts signed by the Company during the reporting period
Applicable Not applicable
(5) Composition of operating cost
Classification of industry
Unit: RMB
2023 2022
Classification Year-on-year
Item Proportion to Proportion to
of industry Amount Amount change
operating cost operating cost
Direct materials 76,130,381,986.14 87.18% 80,345,630,863.86 87.80% -5.25%
Direct labor
Electronic 4,052,203,462.29 4.64% 4,168,178,564.20 4.56% -2.78%
expenses
components
Manufacturing
7,143,465,552.32 8.18% 6,995,389,252.63 7.64% 2.12%
expenses
(6) Whether there is any change in consolidation scope during the reporting period
Yes No
During the reporting period, the Company established 3 subsidiaries. They are respectively Chongqing Goertek Auto Technology Co.,
Ltd., Goertek Smart Technology Vina Co.,Ltd., and GMI Technology GmbH. The Company's subsidiary, Goertek Optical Technology
Co., Ltd., acquired 100% equity of Uphoton Technology (Shaoxing) Co., Ltd. The latter and its subsidiaries are included in the
consolidated statements.
The Company deregistered one of its subsidiaries, Kunshan Goertek Electronics Co., Ltd. during this period.
(7) Significant changes or adjustments in respect of business, products or services of the Company during the reporting
period
Applicable Not applicable
(8) Major clients and suppliers
Major clients of the Company
Total sales amount from top five clients (RMB) 87,481,440,616.00
Proportion of total sales from top five clients to total annual sales 88.75%
Proportion of sales from related parties among top five clients to
0.00%
total annual sales
Information of top five clients
Proportion to total annual
No. Name of client Sales amount (RMB)
sales amount
1 Client 1 42,761,773,279.56 43.38%
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2 Client 2 26,633,971,746.92 27.02%
3 Client 3 8,586,104,544.28 8.71%
4 Client 4 6,106,476,920.65 6.20%
5 Client 5 3,393,114,124.59 3.44%
Total - 87,481,440,616.00 88.75%
Other information of major clients
Applicable Not applicable
The top five clients do not have associated relationship with the Company. The Company's directors, supervisors, senior management,
core technicians, shareholders holding more than 5% of total shares, actual controllers and other related parties do not directly or
indirectly own rights or interests in the major clients.
Major suppliers of the Company
Total purchase amount from top five suppliers (RMB) 35,197,986,931.06
Proportion of total purchase amount from top five suppliers to
46.16%
total annual purchase amount
Proportion of purchase amount from related parties among top
0.00%
five suppliers to total annual purchase amount
Information of top five suppliers
Proportion to total annual
No. Name of supplier Purchase amount (RMB)
purchase amount
1 Supplier 1 24,067,772,914.22 31.56%
2 Supplier 2 4,930,897,186.89 6.47%
3 Supplier 3 2,784,472,064.44 3.65%
4 Supplier 4 1,912,643,290.61 2.51%
5 Supplier 5 1,502,201,474.90 1.97%
Total - 35,197,986,931.06 46.16%
Other information of major suppliers
Applicable Not applicable
The top five suppliers do not have associated relationship with the Company. The Company's directors, supervisors, senior management,
core technicians, shareholders holding more than 5% of total shares, actual controllers and other related parties do not directly or
indirectly own rights or interests in the major suppliers.
3. Expenses
Unit: RMB
2023 2022 Year-on-year change Reason for significant change
Selling expenses 528,150,303.42 548,298,842.05 -3.67% No significant change
General and
2,202,814,353.55 2,294,505,645.46 -4.00% No significant change
administrative expenses
Mainly because the Company
obtained more long term loans to
Financial expenses 351,775,148.64 149,123,081.74 135.90%
improve the loan structure led to an
increase in interest expense.
Research and
4,715,969,451.42 5,226,525,154.99 -9.77% No significant change
development expenses
4. R&D Investment
Applicable Not applicable
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Name of major R&D Status of Expected effects on the future
Purpose of project Objectives
project project development of the Company
Collaborate with major
clients to iterate
Develop a new generation of intelligent hardware
It helps continuously
micro speaker module products, complete R&D
R&D project of consolidate the Company's
products with high of a number of micro
micro speaker In progress competitive advantage and
sensitivity, low distortion, speaker module products,
module market share in the field of
large amplitude, waterproof and achieve mass
acoustic precision components.
and dustproof features. production and
application on client
products
Complete the R&D,
verification, application
and mass production of
MEMS sensors and
It helps facilitate the
microsystem modules
To develop MEMS sensors Company's business expansion
featuring voice
R&D project of and microsystem module in the field of MEMS sensors
interaction,
MEMS sensor and products applied to smart In progress and microsystem modules, and
adapterization and noise
microsystem module hardware and automotive further enhance the Company's
reduction, signal
electronics. comprehensive strength in the
transmission and status
field of MEMS.
monitoring, used in the
field of smart hardware
and automotive
electronics
It helps enhance the Company's
Complete the R&D and
competitive advantage and
Develop the precision optical mass production of
market share in the field of
components and module optical lens and module
VR/MR/AR precision optical
products by using emerging products for new
R&D project of components and modules,
optical technologies such as generation of all-in-one
VR/MR/AR precision promote the Company's ability
''Pancake'' folded-lightpath In progress VR/MR products, and
optical components to provide clients with
lenses and optical waveguide improve the ability of
and modules customized VR/MR/AR optical
technology, and promote comprehensive solution
solutions, and improve the
their application in of optical devices and
Company's vertical integration
VR/MR/AR products. light engines for AR
ability and profitability in the
products.
field of VR/MR/AR.
Complete the design,
technical verification and It helps enhance the
To develop micro projection
commercial application competitiveness of the
modules for AR, AR-HUD,
of related micro Company in AR optical
R&D project of AR and so on, and promote its
In progress projection modules, and modules, and extend the
optical modules application in consumer
develop micro projection Company's capabilities in
electronics, automotive
module solutions for optical modules to the field of
electronics, etc.
consumer electronics and automotive electronics
automotive electronics
Develop lightweight all-in- Cooperate with clients to
It helps consolidate the
R&D project of all- one VR/MR HMD products complete R&D,
Company's competitive
in-one VR/MR Head featuring high-definition In progress validation, mass
advantage and market share in
Mounted Display display, precise motion production of a number
the field of VR/MR.
tracking, etc. of new-generation all-in-
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Name of major R&D Status of Expected effects on the future
Purpose of project Objectives
project project development of the Company
one VR/MR HMD
products based on the
latest chip platform
Cooperate with our client
It helps consolidate the
to complete R&D,
Company's competitive
R&D project of TWS Develop a new generation of validation, mass
In progress advantage and market share in
smart earphones TWS smart earphones production of a number
the field of TWS smart
of new-generation of
earphones.
TWS smart earphones
Cooperate with our client
Develop a new generation of It helps consolidate the
R&D project of smart to complete R&D,
smart wearable devices with Company's competitive
wearable devices for validation, mass
functions of independent In progress advantage and market share in
sport and health production of a new
communication, health smart wearable devices such as
related applications generation of smart
monitoring features and etc. smart watches and smart bands
watches and smart bands
Complete the R&D and
trial production of a
number of AR glasses
products, based on the
latest chip platform, with
the functions of data
processing and wireless It helps enhance the Company's
Develop wireless lightweight communication, using R&D experience and
R&D project of smart
AR glasses and their main advanced precision technology accumulation in the
wireless lightweight In progress
functional modules for future optical technologies and field of AR and facilitate the
AR glasses
AR applications. micro-display business expansion of the
technologies such as Company in AR field.
optical waveguide and
silicon-based LED, so as
to develop the solution
capability for AR glasses
and their main functional
modules
Details of R&D personnel
2023 2022 Year-on-year change
Number of R&D personnel 12,377 12,305 0.59%
Proportion of R&D personnel to
15.21% 14.42% 0.79%
total number of employees
Education background of R&D personnel
Bachelor 8,078 8,099 -0.26%
Master 2,417 2,550 -5.22%
PhD 63 54 16.67%
Age structure of R&D personnel
Below the age of 30 5,059 5,346 -5.37%
Aged between 30 to 40 6,329 6,172 2.54%
Over the age of 40 989 787 25.67%
The Company's investment in R&D
2023 2022 Year-on-year change
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Amount of R&D Investment (RMB) 4,572,855,380.03 5,198,312,190.48 -12.03%
Proportion of R&D investment to
4.64% 4.96% -0.32%
revenue
Capitalized amount of R&D investment
542,789,272.24 597,278,121.61 -9.12%
(RMB)
Proportion of capitalized R&D
11.87% 11.49% 0.38%
investment to R&D investment
Reasons and impacts of significant changes in R&D personnel composition of the Company
Applicable Not applicable
Reasons for significant changes in the proportion of total R&D investment to revenue compared to preceding year
Applicable Not applicable
Reasons for and explanation of its reasonableness of significant changes in capitalized R&D investment and rationale
Applicable Not applicable
5. Cash flow
Unit: RMB
Item 2023 2022 Year-on-year change
Sub-total of cash inflow from
80,166,508,468.96 92,960,786,011.89 -13.76%
operating activities
Sub-total of cash outflow from
72,014,620,225.58 84,643,672,647.21 -14.92%
operating activities
Net cash flow from operating
8,151,888,243.38 8,317,113,364.68 -1.99%
activities
Sub-total of cash inflow from
5,194,943,904.22 1,141,805,421.45 354.98%
investing activities
Sub-total of cash outflow from
12,778,336,083.57 10,218,818,104.61 25.05%
investing activities
Net cash flow from investing
-7,583,392,179.35 -9,077,012,683.16 -16.45%
activities
Sub-total of cash inflow from
29,078,690,255.10 31,722,066,906.40 -8.33%
financing activities
Sub-total of cash outflow from
27,304,205,611.87 29,714,438,433.99 -8.11%
financing activities
Net cash flow from financing
1,774,484,643.23 2,007,628,472.41 -11.61%
activities
Net increase in cash and cash
2,352,733,172.97 1,662,092,566.77 41.55%
equivalents
Main influencing factors of significant year-on-year changes in relevant data
Applicable Not applicable
The sub-total of cash inflow from investing activities increased by 354.98% year-on-year to RMB 5,194.9439 million. This was mainly
due to the receipt of principal from the maturity of term deposits and the increase in cash received from foreign exchange derivative
investments.
The reason for significant difference between the net cash flow from the Company's operating activities during the reporting period
and net profit in current year.
Applicable Not applicable
The net cash flow generated from operating activities exceeded the net profit of the current year by 699.67%, mainly due to the impact
of non-cash items such as depreciation of fixed assets and amortization of intangible assets. At the same time, the amount of accounts
receivable recovered by the Company increased during the period.
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V. Analysis of Non-Main Business
Applicable Not applicable
Unit: RMB
Proportion in total Whether it is
Amount Explanation of the cause
profit sustainable
Mainly due to the Company's
investment losses in foreign
Investment income -73,393,865.89 -9.28% No
exchange derivatives during the
reporting period
Mainly due to changes in the
Gains on changes in fair fair value of the Company's
115,909,152.44 14.65% No
value equity investments during the
reporting period
Mainly because the Company
made some provision for
Asset impairment losses -299,625,741.31 -37.87% No
inventory write-down during
the reporting period
Mainly refers to the amount
that the Company was unable
Non-operating income 34,817,135.08 4.40% to pay and the liquidated No
damages collected during the
reporting period
Mainly due to the non-current
asset destruction and scrapping
Non-operating expenses 152,852,797.95 19.32% No
losses of the Company during
the reporting period
Mainly due to the government
grants included in the current
Other income 372,861,056.96 47.13% No
profit and loss by the Company
during the reporting period
VI. Analysis of Assets and Liabilities
1. Major changes in asset composition
Unit: RMB
End of 2023 At the beginning of 2023
Proportion Proportion YoY Note of significant
Amount in total Amount in total change (%) change
assets assets
The Company's
operating cash flow
remained stable, while
Cash at bank and
14,737,312,329.71 19.98% 12,682,871,091.80 16.41% 3.57% investment cash
on hand
outflow decreased,
leading to an increase in
free cash flow.
The decline in the
Accounts
12,424,618,676.81 16.85% 14,396,180,782.93 18.63% -1.78% Company's revenue
receivable
scale in the fourth
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quarter led to a decrease
in the ending balance of
accounts receivable.
Contract assets
The Company
strengthened inventory
management during the
Inventories 10,794,894,394.42 14.64% 17,348,670,744.58 22.45% -7.81%
reporting period,
resulting in a decrease
in ending inventory.
Investment
properties
The Company increased
long-term equity
Long-term equity
760,220,882.07 1.03% 361,008,671.83 0.47% 0.56% investment in the
investments
industrial chain during
the reporting period.
During the reporting
period, some of the
Company's projects
under construction
Fixed assets 22,305,456,354.63 30.25% 21,459,756,268.25 27.77% 2.48%
reached the intended
usable state and were
transferred to fixed
assets.
Construction in
2,071,280,343.55 2.81% 2,424,443,775.33 3.14% -0.33%
progress
Right-of-use
615,431,849.91 0.83% 580,175,922.73 0.75% 0.08%
assets
The Company
optimized its loan
Short-term structure and repaid
5,214,491,316.62 7.07% 7,120,846,026.67 9.22% -2.15%
borrowings some short-term
borrowings during the
reporting period.
Contract liabilities 3,472,638,215.20 4.71% 2,295,347,547.31 2.97% 1.74%
The Company
optimized its loan
structure during the
Long-term
6,631,470,751.86 8.99% 2,206,000,000.00 2.85% 6.14% reporting period,
borrowings
resulting in an increase
in long-term
borrowings.
Lease liabilities 518,159,559.63 0.70% 470,704,507.75 0.61% 0.09%
Company's accounts
Accounts payable 17,582,263,359.17 23.84% 25,748,758,270.19 33.32% -9.48% payable for materials
not yet due decreased.
Foreign assets account for a relatively high proportion
Applicable Not applicable
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Proportion of Whether
Measures to overseas there is a
Cause of Assets scale Operation
Asset details Location ensure asset Earnings assets in the significant
formation (RMB) mode
safety net assets of impairment
the Company risk
Goertek Effective
Technology Production internal
Establishment 4,739,848,864.35 Vietnam Normal 15.38% No
Vina Company & sales control
Limited mechanism
The assets scale refers to the net assets of overseas subsidiaries. The proportion of overseas assets in the net assets
Other
of the Company refers to the proportion of the net assets of overseas subsidiaries in the net assets of the listed
circumstances
Company at the end of the reporting period.
2. Assets and liabilities measured at fair value
Applicable Not applicable
Unit: RMB
Profit and loss
Cumulative Impairment
from changes Purchase Sales amount in
changes in fair accrued in
Item Opening balance in fair value in amount in the the reporting Other changes Closing balance
value included current
the reporting reporting period period
in equity period
period
Financial assets
1. Financial
assets held for
trading
(excluding 152,722,198.06 90,315,106.30 254,500,000.00 17,322,107.10 3,000,000.00 483,215,197.26
derivative
financial
assets)
2. Derivative
financial 185,939,899.60 -82,278,125.54 568,120.37 104,229,894.43
assets
3. Other debt
investments
4. Investments
in other equity 699,249,262.24 -55,947,128.51 11,835,470.16 591,269,883.71
instruments
5. Other non-
current
318,661,575.31 30,388,698.95 109,223,851.41 137,739,380.06 2,105,498.79 322,640,244.40
financial
assets
6. Financing
22,375,874.12 21,722,444.40 35,039,088.41 9,059,230.11
receivables
Sub-total of
financial 1,378,948,809.33 38,425,679.71 -55,947,128.51 385,446,295.81 190,100,575.57 17,509,089.32 1,510,414,449.91
assets
Total of above
1,378,948,809.33 38,425,679.71 -55,947,128.51 385,446,295.81 190,100,575.57 17,509,089.32 1,510,414,449.91
amounts
Financial
202,293,742.46 77,483,472.73 201,994,258.68 197,224,742.46 129,579,785.95
liabilities
Other changes
None
Whether the measurement attributes of major assets of the Company have changed significantly during the reporting period
Yes No
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3. Restrictions on asset rights as of the end of reporting period
Book value at the end of the reporting
Item Reasons for restrictions
period (RMB)
Cash at bank and on hand 1,456,289,098.94 Deposit for bills and borrowings
Notes receivable 100,866,907.03 Bill pledge, discount, etc.
Intangible assets 61,897,657.63 Used for mortgage purposes
Current portion of non-current assets 453,106,027.78 Bank-issued financing guarantees, bills, etc.
Other non-current assets 533,377,444.44 Bank-issued financing guarantees, bills, etc.
Total 2,605,537,135.82
Ⅶ. Analysis of Investment
1. Overall situation
Applicable Not applicable
Investment amount in 2023 (RMB) Investment amount in 2022 (RMB) YoY change (%)
8,889,964,898.25 9,210,478,674.05 -3.48%
2. Major equity investments acquired during the reporting period
Applicable Not applicable
3. Major non-equity investments in progress during the reporting period
Applicable Not applicable
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4. Financial asset investment
(1) Securities investment
Applicable Not applicable
Unit: RMB
Profit and loss Cumulative Purchase
Profit and Book value at
Accounting from changes changes in amount Sales amount
Security Security Security Initial investment Book value at loss in the the end of the Accounting Source
measurement in fair value in fair value in the in the reporting
type code abbreviation cost the beginning reporting reporting items of funds
model the reporting included in reporting period
period period
period equity period
Domestic
Financial Self-
and Fair value
KOPN KOPN 84,852,571.05 32,722,198.06 27,956,409.20 17,322,107.10 -7,707,816.68 43,356,500.16 assets held raised
foreign measurements
for trading funds
stocks
Total 84,852,571.05 - 32,722,198.06 27,956,409.20 17,322,107.10 -7,707,816.68 43,356,500.16 - -
Date of announcement disclosure by
the Board of Directors for approval February 11, 2017
of securities investment
Date of announcement disclosure by
shareholders meeting for approval of March 2, 2017
securities investment (if any)
(2) Derivatives investment
Applicable Not applicable
1) Investments in derivatives for hedging during the reporting period
Applicable Not applicable
Unit: RMB 10,000
Proportion of
Profit and loss from Cumulative investment amount
Amount of Amount of sales
Type of derivatives Amount of initial changes in fair changes in fair in the Company's
Opening balance purchase during the during the Closing balance
investment investment value in the value included in net asset at the end
reporting period reporting period
reporting period equity of the reporting
period
Option - 292,513.2 1,997.66 817,276.27 912,182.14 197,607.33 6.41%
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Full Text of Goertek Inc. Annual Report 2023
Proportion of
Profit and loss from Cumulative investment amount
Amount of Amount of sales
Type of derivatives Amount of initial changes in fair changes in fair in the Company's
Opening balance purchase during the during the Closing balance
investment investment value in the value included in net asset at the end
reporting period reporting period
reporting period equity of the reporting
period
Forward - 616,367.1 5,937.6 2,856,619.43 2,512,572.41 960,414.12 31.17%
Swap - 317,806.82 -8,414.73 1,276,382.86 949,663.98 644,525.7 20.92%
Total - 1,226,687.12 -479.47 4,950,278.56 4,374,418.53 1,802,547.15 58.50%
Description of
whether the
accounting policies
and specific
accounting The Company's derivatives transactions are calculated in accordance with Accounting Standards for Business Enterprises No. 22 — Recognition and Measurement of
principles for the Financial Instruments. The initial measurement is based on the fair value of the derivatives on the date of the signing of the transaction contracts, and the subsequent
Company's hedging measurement is based on its fair value. The derivative instrument with positive fair value is recognized as an asset, while the one with negative fair value is recognized as
business has a liability. The gains and losses generated by changes in fair value are directly recognized in current profit and loss.
changed The accounting policies and specific accounting principles for the Company's derivatives have no significant change compared with that of previous reporting period.
significantly
compared with that
of previous
reporting period
The Group confirmed the gains and losses from derivatives transactions in 2023, recognizing a loss of RMB 4.7947 million from changes in fair value and an investment
Statement of actual
loss of RMB 134.7784 million, for a total loss of RMB 139.5731 million; the hedged project generated a gain of RMB 113.2053 million due to exchange rate fluctuations
profit and loss in
in 2023. In total, the Group's net loss from derivative transactions in 2023 was RMB 26.3678 million, after taking into account the changes in the value of the hedging
the reporting period
instruments and the hedged items.
Statement of To avoid exchange rate risks in daily operations, the Company hedged against its risks through financial derivatives. The changes in the value of the financial derivatives
hedging effect effectively hedged the risk of changes in the existing position, and the overall hedging result is within expectations.
Source of funds for
derivatives Self-raised funds
investment
Risk analysis and 1. The financial derivatives transactions carried out by the Company are for the purpose of fixing costs, avoiding and preventing risks of foreign exchange rate and interest
control measures rate, and prohibiting any risk speculation. The trading quota of the Company's financial derivatives shall not exceed the authorized quota as reviewed and approved by the
for derivatives Board of Directors or the general meeting of shareholders. 2. The Company has formulated a strict management system for financial derivatives transactions, which clearly
positions during the stipulates the operating principles, approval authority, responsible departments and persons, internal operating procedures, information isolation measures, internal risk
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Full Text of Goertek Inc. Annual Report 2023
Proportion of
Profit and loss from Cumulative investment amount
Amount of Amount of sales
Type of derivatives Amount of initial changes in fair changes in fair in the Company's
Opening balance purchase during the during the Closing balance
investment investment value in the value included in net asset at the end
reporting period reporting period
reporting period equity of the reporting
period
reporting period reporting system and risk handling procedures, and information disclosure of financial derivatives transactions, in order to control trading risks arising therefrom. 3. The
(including but not Company shall carefully review the terms of contracts signed with qualified banks and other financial institutions, and strictly implement the risk management system to
limited to market prevent legal risks. 4. The Company's business personnel will continue to track the changes in the open market price or fair value of financial derivatives, timely assess the
risk, liquidity risk, changes in risk exposure of financial derivatives transactions, and regularly report to the management of the Company. If any abnormal situation, inform the Board of
credit risk, Directors of the risk and take emergency measures accordingly. 5. The internal audit department regularly conducts internal audit on the compliance of financial derivatives
operational risk, transactions.
legal risk, etc.)
In case of changes
in market price or
fair value of
invested derivatives
during the
reporting period,
the analysis of fair
Changes in the fair value of foreign exchange derivatives are calculated based on the difference between the fair market price and the contract price in the month of the
value of the
settlement date determined by the Company.
derivatives shall
disclose the
specific methods
used and the setting
of relevant
assumptions and
parameters
Involvement in
litigation (if None
applicable)
Date of
announcement
disclosure by the April 18, 2023
Board of Directors
for approval of the
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Full Text of Goertek Inc. Annual Report 2023
Proportion of
Profit and loss from Cumulative investment amount
Amount of Amount of sales
Type of derivatives Amount of initial changes in fair changes in fair in the Company's
Opening balance purchase during the during the Closing balance
investment investment value in the value included in net asset at the end
reporting period reporting period
reporting period equity of the reporting
period
investment in
derivatives (if any)
Date of
announcement
disclosure by
shareholders
May 11, 2023
meeting for
approval of the
investment in
derivatives (if any)
Special opinions of
independent The Company carries out financial derivatives transactions mainly to avoid the risks caused by exchange rate and interest rate fluctuations, and to effectively control the
directors on the cost uncertainty caused by exchange rate and interest rate risks. The Company has formulated the "Securities Investment and Derivatives Transaction Management System
Company's of Goertek Inc.", which is conducive to strengthening the risk management and control of financial derivatives transactions, is in line with the overall interests of the
derivatives Company, and does not harm the legitimate rights and interests of small and medium-sized shareholders. Therefore, the Company has been approved to carry out the
investment and risk business above.
control
2) Investments in derivatives for speculation during the reporting period
Applicable Not applicable
The Company did not make any investment in derivatives for speculation during the reporting period.
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Full Text of Goertek Inc. Annual Report 2023
5. Use of raised funds
Applicable Not applicable
(1) Overall use of raised funds
Applicable Not applicable
Unit: RMB 10,000
Total The
Total
Total amount of Proportion of amount
Accumulated amount Purpose of
amount of Accumulated raised funds accumulated of raised
Total Net total amount of raised the raised
raised funds amount of with total amount funds that
Year of Means of amount amount of raised funds funds that
used during raised funds changed of raised have
raising raising of raised of raised funds with that have not
the that have been purposes funds with been idle
funds funds changed have not been yet
reporting used during the changed for more
purposes been yet used
period reporting purposes than two
used
period years
As of the
end of this
reporting
period,
Public unused
issuance of raised
2020 convertible 400,000 398,903 64,993.75 402,197.33 53,703.18 53,703.18 13.43% 37.05 funds are 0.00
corporate deposited
bonds in the
special
account for
raised
funds.
Total - 400,000 398,903 64,993.75 402,197.33 53,703.18 53,703.18 13.43% 37.05 - 0.00
Description of overall use of raised funds
The Company actually invested RMB 649.9375 million of raised funds in current period. As of December 31, 2023, the Company had used a total of
RMB 4,021.9733 million of raised funds. All raised funds have been invested. The total amount of unused raised funds is RMB 370,500 (including
interest income), which is deposited in the Company's special account for raised funds.
(2) Projects in which the raised funds were proposed to be invested
Applicable Not applicable
Unit: RMB 10,000
Whether
Whether the
Committed Accumulated The date on there is any
project has Total Total Amount Investment Benefits Whether it
investment investment which the significant
been committed investment invested progress at realized achieved
projects and amount at the project change in
changed investment after during the the end of during the the
investment of end of the reaches its the
(including of raised adjustment reporting the period reporting expected
over-raised reporting intended feasibility
partial funds (1) period (3)＝(2)/(1) period benefits
funds period (2) usage state of the
changes)
project
Committed investment projects
The project of
binaural true August 31,
No 218,903 218,903 0.06 220,141.98 100.57% 3,292.91 No No
wireless smart 2022
earphones
AR/VR and
related optical August 31,
No 60,000 60,000 2.47 60,583.85 100.97% 15,507.79 No No
module 2022
project -
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Full Text of Goertek Inc. Annual Report 2023
Whether
Whether the
Committed Accumulated The date on there is any
project has Total Total Amount Investment Benefits Whether it
investment investment which the significant
been committed investment invested progress at realized achieved
projects and amount at the project change in
changed investment after during the the end of during the the
investment of end of the reaches its the
(including of raised adjustment reporting the period reporting expected
over-raised reporting intended feasibility
partial funds (1) period (3)＝(2)/(1) period benefits
funds period (2) usage state of the
changes)
project
AR/VR
project
AR/VR and
related optical
module
June 30,
project - No 40,000 40,000 6,739.3 40,497.33 101.24% 995.36 No No
2023
optical
module
project
Qingdao
Not Not Not
R&D center Yes 80,000 27,270.99 4,548.74 27,270.99 100.00% Yes
applicable applicable applicable
project
Permanent
replenishment Not Not Not Not Not
0.00 52,729.01 53,703.18 53,703.18 -
of working applicable applicable applicable applicable applicable
capital
Sub-total of
committed
- 398,903 398,903 64,993.75 402,197.33 - - 19,796.06 - -
investment
projects
Direction of the investment with over raised funds
Not
applicable
Total - 398,903 398,903 64,993.75 402,197.33 - - 19,796.06 - -
Explain the
reasons for
failure to
achieve the
planned ① In 2023, due to market changes, client project fluctuations, and other reasons, the project of binaural true wireless smart earphones,
progress and
AR/VR project, and AR/VR-related optical module project did not achieve the expected benefits this year.
estimated
profit by item ②Since the second half of 2022, the macro economy, the consumer electronics industry, and the Company's business operations all
(including the faced new challenges. The implementation background of the Qingdao R&D center project also changed significantly. After review
reasons why and approval at the 11th meeting of the 6th Board of Directors on December 5, 2023, the 10th meeting of the 6th Supervisory Board,
"Not and the 2nd extraordinary general meeting of 2023 on December 21, 2023, the remaining raised funds originally planned for the Qingdao
applicable" is R&D center project would be used to permanently replenish the working capital for the Company's daily production and operation, as
selected under well as business development.
"Whether the
estimated
profit was
achieved")
Description of
significant
For details, please refer to Ⅶ. Analysis of Investment - 5. Use of raised funds - (3) Changes in the projects in which the raised funds
change in the
were proposed to be invested.
feasibility of
the project
Amount, use
of over-raised
Not applicable
funds and
progress of
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Full Text of Goertek Inc. Annual Report 2023
Whether
Whether the
Committed Accumulated The date on there is any
project has Total Total Amount Investment Benefits Whether it
investment investment which the significant
been committed investment invested progress at realized achieved
projects and amount at the project change in
changed investment after during the the end of during the the
investment of end of the reaches its the
(including of raised adjustment reporting the period reporting expected
over-raised reporting intended feasibility
partial funds (1) period (3)＝(2)/(1) period benefits
funds period (2) usage state of the
changes)
project
use thereof
Applicable
Occurred in previous years
On August 20, 2020, the Company held the 8th meeting of the 5th Board of Directors and the 6th meeting of the 5th Supervisory Board,
Change in which reviewed and approved the Proposal on Changing the Implementation Subject and Implementation Location of Some Investment
location of the Projects with Raised Capital and Increasing the Capital of Wholly-owned Subsidiaries, and agreed to change: the implementation
project subject of AR/VR and related optical module project from Goertek Inc. to the Company's subsidiaries Weifang Goertek Electronics
invested with Co., Ltd. and Goertek Optical; The implementation location was changed accordingly from Goertek Photoelectric Park in Weifang
raised funds High-tech Zone to Weifang Goertek Plant, east of Gaoxin No. 2 Road, south of Yuqing East Street in Weifang comprehensive free trade
zone and Goertek Optical Plant, phase III of Goertek Photoelectric Park in Weifang High-tech Zone; The Company increased the capital
to Weifang Goertek Electronics Co., Ltd. with the raised funds of RMB 600 million and increased the capital to Goertek Optical with
the raised funds of RMB 400 million, for the purpose of specific implementation of above-mentioned investment projects.
Adjustment
on how to
invest the Not applicable
projects with
raised funds
Upfront Applicable
investment of
On July 9, 2020, the Company held the 7th meeting of the 5th Board of Directors and the 5th meeting of the 5th Supervisory Board,
the project
which reviewed and approved the Proposal on Replacing the Self-Raised Funds Invested in the Projects in Advance with the Raised
with raised
Funds, and agreed to use the raised funds to replace the self-raised funds of RMB 315.7238 million invested in the investment projects
funds and
in advance. The fund replacement above has been verified by Zhongxi CPAs (Special General Partnership), and an authentication report
replacement
has been issued.
thereof
Applicable
① On July 9, 2020, the Company held the 7th meeting of the 5th Board of Directors and the 5th meeting of the 5th Supervisory Board,
which reviewed and approved the Proposal on Temporary Replenishment of Working Capital with Idle Raised Funds. It was agreed that
the Company shall use the idle raised funds not exceeding RMB 2.5 billion to temporarily supplement working capital. The validity
period shall not exceed 12 months from the date of approval by the Board of Directors. After expiration, it shall be returned to the
special account for raised funds in a timely manner. The Company returned RMB 0.8 billion and RMB 1.7 billion of the raised funds
to the special account for raised funds in advance on September 17, 2020 and November 4, 2020 respectively.
② On November 5, 2020, the Company held the 11th meeting of the 5th Board of Directors and the 9th meeting of the 5th Supervisory
Board, which reviewed and approved the Proposal on Temporary Replenishment of Working Capital with Partial Idle Raised Funds. It
was agreed that the Company temporarily supplements the working capital with idle raised funds of no more than RMB 2.5 billion. The
Temporary
validity period shall not exceed 12 months from the date of approval by the Board of Directors. After expiration, it shall be returned to
replenishment
the Company's special account for raised funds in a timely manner. The Company returned RMB 0.5 billion and RMB 2 billion of the
of working
raised funds to the special account for raised funds on October 29, 2021 and November 3, 2021 respectively.
capital with
idle raised ③ On November 8, 2021, the Company held the 24th meeting of the 5th Board of Directors and the 19th meeting of the 5th Supervisory
funds Board, which reviewed and approved the Proposal on Temporary Replenishment of Working Capital with Partial Idle Raised Funds. It
was agreed that the Company temporarily supplements the working capital with idle raised funds of no more than RMB 1.2 billion. The
validity period shall not exceed 12 months from the date of approval by the Board of Directors. After expiration, it shall be returned to
the Company's special account for raised funds in a timely manner. The Company returned the above-mentioned RMB 300 million,
RMB 100 million and RMB 100 million of the raised funds to the special account for raised funds on February 24, 2022, May 16, 2022,
and August 29, 2022 respectively. The Company returned the remaining RMB 700 million of the raised funds to the special account for
raised funds on November 4, 2022.
④ On November 21, 2022, the Company held the 1st meeting of the 6th Board of Directors and the 1st meeting of the 6th Supervisory
Board, which reviewed and approved the Proposal on Temporary Replenishment of Working Capital with Partial Idle Raised Funds. It
was agreed that the Company temporarily supplements the working capital with idle raised funds of RMB 450 million. The validity
period of which shall not exceed 12 months from the date of approval by the Board of Directors. After expiration, it shall be returned
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Whether
Whether the
Committed Accumulated The date on there is any
project has Total Total Amount Investment Benefits Whether it
investment investment which the significant
been committed investment invested progress at realized achieved
projects and amount at the project change in
changed investment after during the the end of during the the
investment of end of the reaches its the
(including of raised adjustment reporting the period reporting expected
over-raised reporting intended feasibility
partial funds (1) period (3)＝(2)/(1) period benefits
funds period (2) usage state of the
changes)
project
to the special account for raised funds in a timely manner. The Company returned the above-mentioned RMB 450 million of the raised
funds to the special account for raised funds on November 16, 2023.
The Company held the 11th meeting of the 6th Board of Directors and the 10th meeting of the 6th Supervisory Board on December 5,
Permanent 2023, and held the 2nd extraordinary general meeting of 2023 on December 21, 2023, which reviewed and approved the Proposal on
replenishment Changing the Use of Part of the Raised Funds to Permanently Replenish Working Capital. It was agreed that the remaining raised funds
of working originally planned for the Qingdao R&D center project would be used to permanently replenish the working capital for the Company's
capital daily production and operation, as well as business development. On December 22, 2023, the Company transferred the above-mentioned
RMB 537.0318 million for permanent replenishment of working capital to the general account of Goertek Technology Co., Ltd.
Amount and
reasons for
the balance of
raised funds
Not applicable
in the
implementatio
n of the
project
Purpose of the
raised funds
As of the end of this reporting period, unused raised funds were deposited in the special account for raised funds.
that have not
been yet used
Problems or
other
situations in
None
the use and
disclosure of
raised funds
(3) Changes in the projects in which the raised funds were proposed to be invested
Applicable Not applicable
Unit: RMB 10,000
The total
Actual Actual The date on Whether the
amount of Investment Benefits Whether it
investment cumulative which the feasibility of
Original raised funds progress at realized achieved
New project amount investment project the new
project before planned to be the end of the during the the
after change during this amount as of reaches its project has
change invested in period (3)＝ reporting expected
reporting the end of the intended changed
the new (2)/(1) period benefits
period period (2) usage state significantly
project (1)
Permanent
Qingdao
replenishment Not Not Not Not
R&D center 52,729.01 53,703.18 53,703.18 -
of working applicable applicable applicable applicable
project
capital
Total - 52,729.01 53,703.18 53,703.18 - - - - -
Since the second half of 2022, the macro economy, the consumer electronics industry, and the
Company's business operations all faced new challenges. The implementation background of the
Reasons for changes, decision-making Qingdao R&D center project also changed significantly in the following aspects:
procedures, and information disclosure (by
① Significant changes in macro economy and consumer electronics industry
project)
Since the second half of 2022, the consumer electronics industry has been affected by multiple negative
factors, including the global economic slowdown, high inflation in major European and American
32
Full Text of Goertek Inc. Annual Report 2023
countries, and continuous interest rate hikes by central banks such as the Federal Reserve. As a result,
the market demand for consumer electronics has declined. Global shipments of VR/AR products
declined significantly in 2023, according to data from IDC, Canalys, and Counterpoint. Shipments of
smart wearables (smart watches and smart bands) and TWS smart earphones in the same period also
fell below expectations to varying degrees. The development of major smart hardware products in the
consumer electronics industry had undergone significantly changes since the initial implementation of
the Qingdao R&D center project. It's necessary for the Company to prudently evaluate and adjust the
scale and pace of the Company's resource investment according to the changes in the external
environment, and make corresponding adjustments to the Company's related fundraising projects.
② Changes in the Company's business operations
Since the second half of 2022, the Company's operating performance has fluctuated. This is due to the
overall insufficient market demand for traditional and emerging smart hardware products, the lower-
than-expected terminal sales of the Company's clients, and the fluctuations in the specific product
project. The Company's business operations and revenue growth have changed significantly since the
Qingdao R&D center project was first implemented. This requires the Company to adjust the scale and
pace of its overall resource investment, including the fundraising projects, to ensure that its resource
investment is in line with its business development. In addition, the Company has invested in the design,
research and development, and experimental capabilities of precision optical components required for
VR/AR products, as well as advanced process technology capabilities such as nano-imprinting in
Weifang, Shanghai, and other places in recent years. This investment can, to some extent, fulfill some
of the functions originally planned for the Qingdao R&D center project. The Company is also working
closely with the National Virtual Reality Innovation Center (Qingdao) to make better use of the existing
resources of the Qingdao R&D center project.
Decision-making procedures and information disclosure: On December 5, 2023, the Company
conducted the 11th meeting of the 6th Board of Directors and the 10th meeting of the 6th Supervisory
Board. Additionally, on December 21, 2023, the Company held its 2nd extraordinary 'general meeting
of the year. These meetings reviewed and approved the Proposal on Changing the Use of Part of the
Raised Funds to Permanently Replenish Working Capital. For more details, please refer to the
announcement made by Goertek Inc. on December 6, 2023, disclosed on the Company's designated
information disclosure media.
Cases and reasons for not reaching the
planned progress or expected benefits (by Not applicable
project)
Description of significant changes in the
Not applicable
feasibility of the new project
Ⅷ. Sales of major assets and equities
1. Sales of major assets
Applicable Not applicable
The Company did not sell any major assets during the reporting period.
2. Sales of major equity
Applicable Not applicable
Ⅸ. Analysis of major subsidiaries and associates
Applicable Not applicable
Major subsidiaries and associates with an impact of more than 10% on the Company's net profit
Unit: RMB
Type of Registered Operating Operating
Name of company Main business Total assets Net asset Net profit
company capital revenue profit
Goertek Electronic
USD
Technology Vina Subsidiary component 11,839,433,292.53 4,739,848,864.35 19,494,416,161.59 703,073,226.87 681,158,372.06
120,000,000
Company Limited manufacturing
33
Full Text of Goertek Inc. Annual Report 2023
Type of Registered Operating Operating
Name of company Main business Total assets Net asset Net profit
company capital revenue profit
Goertek
Trade and
(HongKong) Co., Subsidiary USD 1,000,000 15,022,058,814.99 1,899,140,181.16 83,041,950,587.21 417,978,150.29 352,370,090.30
investment
Limited
Goertek
Electronic
Intelligence
Subsidiary component 350,000,000.00 2,855,524,321.73 282,856,592.01 6,368,986,368.88 305,414,592.13 307,408,139.93
Technology Co.,
manufacturing
Ltd.
Yili Precision Electronic
Manufacturing Co., Subsidiary component 330,000,000.00 2,699,530,121.75 1,117,680,164.40 2,587,950,145.32 285,114,297.70 255,938,632.59
Ltd. manufacturing
Rongcheng
Electronic
Goertek
Subsidiary component 2,100,000,000.00 7,276,682,209.51 2,352,497,685.46 42,072,590,896.18 226,437,113.34 183,074,829.58
Technology Co.,
manufacturing
Ltd.
Weifang Goertek Electronic
Microelectronics Subsidiary component 500,000,000.00 2,659,366,300.21 1,870,818,274.25 2,058,212,163.52 126,783,965.01 121,935,895.54
Co., Ltd. manufacturing
Weifang Goertek Electronic
- -
Electronics Co., Subsidiary component 1,636,601,925.00 9,391,149,470.21 2,117,620,316.01 25,918,055,522.17
308,913,686.53 221,382,708.53
Ltd. manufacturing
Acquisition and disposal of subsidiaries during the reporting period
Applicable Not applicable
Approach on acquisition and disposal of Impact on overall production, operation
Name of company
subsidiaries during the reporting period and performance
Chongqing Goertek Auto Technology Co.,
Newly established No significant impact
Ltd.
Goertek Smart Technology Vina Co.,Ltd. Newly established No significant impact
GMI Technology GmbH Newly established No significant impact
Strengthening the Company's layout in
the optical field and supporting the long-
Uphoton Technology (Shaoxing) Co., Ltd. Equity acquisition
term future development of the
Company's optical business
Kunshan Goertek Electronics Co., Ltd Deregistered No significant impact
Description of major subsidiaries and associates
None
Ⅹ. Structural Entities Controlled by the Company
Applicable Not applicable
XI. Outlook for the Future Development of the Company
1. Industry trend and competition
The global technology and consumer electronics industry is continuing to shift from the mobile Internet era to the post-mobile era. The
rapid development of AI technology in recent years has brought new influences and opportunities to the development process of this
industry.
In the era of mobile Internet, smartphones and their peripheral products are the main drivers of development in the technology and
consumer electronics industries. However, in recent years, the innovation speed of software and hardware of smartphone products has
slowed down, and the growth of market scale has stagnated. IDC predicts that global smartphone shipments will reach 1.2 billion units
in 2024, with an approximate 2.8% YoY increase. With the slow growth of the smartphone market, the industry generally expects
emerging smart hardware products, such as VR, MR, and AR devices, to become the main driving force for the development of the
industry in the post-mobile era.
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Full Text of Goertek Inc. Annual Report 2023
In 2023, the development speed and market size growth of some emerging smart hardware products were slower than expected. This
was due to both external objective factors, such as the weak global economic recovery, interest rate hikes in major European and
American countries, and insufficient market demand, and internal industry factors, such as the need for further breakthroughs in key
technologies for some products, the need for further development of product application scenarios, and the need for further enrichment
of software applications and content. The development of emerging smart hardware products is still being actively promoted. Well-
known technology and consumer electronics manufacturers continue to invest heavily in this field and continue to launch new
representative products. Driven by the industry as a whole, and with the recovery of the macro economy and the consumer electronics
industry, emerging smart hardware products are expected to continue to develop healthily in the next few years.
IDC predicts global shipments of VR and MR devices to reach 24.7 million units by 2028, with a compound annual growth rate of
about 29.2% from 2023 to 2028. With the development of software and hardware technologies such as image sensing and spatial
computing, the boundaries between VR and MR are further blurred, and MR products have gradually become the mainstream of the
market. In the next few years, more well-known manufacturers in the industry are expected to follow this product technology trend.
The exploration of application scenarios and software content for MR products is expected to accelerate and usher in explosive growth.
IDC predicts global AR device shipments to reach 10.9 million units by 2028, with a compound annual growth rate of about 87.1%
from 2024 to 2028. AR products have the product characteristics of "blending the virtual and real worlds", the ability to seamlessly
link with the mobile Internet content ecosystem, and the potential for integration with AI technology, showing huge future application
potential and market potential. Well-known manufacturers in the industry continue to promote the development of related new
technologies such as semiconductor chips, microdisplays, and optical waveguides. As the relevant technical bottlenecks are overcome,
mature AR products are expected to be gradually introduced to the market in the next few years and usher in rapid development.
Canalys predicts global smart wearable shipments to reach 204 million units in 2024, with an approximate 10% YoY increase. As
consumers pay more attention to exercise and health in the post-mobile era, high-precision and high-reliability vital signs monitoring
technology, especially ECG, blood pressure monitoring, and non-invasive blood glucose monitoring technology, is currently the focus
of innovation for hundreds of millions of patients with hypertension, diabetes, and subhealthy individuals around the world. Relevant
technological breakthroughs in the above fields are expected to bring new explosive growth to smart wearable products.
In recent years, the development of AI technology, represented by large language models, has been remarkable. It is also expected to
bring new development opportunities for the consumer electronics industry and emerging smart hardware products. On the one hand,
the combination of AI and emerging smart hardware products will create a wide range of new product application scenarios, making
smart hardware products more intelligent and user-friendly. This will improve the consumer experience of smart hardware products
and create new market demand. AI has significant efficiency advantages in content creation. It can help solve the problem of insufficient
software and content for VR and MR smart hardware products. This will promote consumer demand, enhance adhesiveness of user,
and better support the innovation and development of business models. AI technology also has broad application prospects in the
software/hardware development and intelligent manufacturing of smart hardware products.
The development of emerging smart hardware products and the accompanying increase in demand for precision optical components
and modules, precision acoustic components, MEMS sensors and microsystem modules, haptic components, precision structural parts,
and other related products will present new growth opportunities for the Company's emerging smart hardware and precision
components businesses. Embracing the opportunities presented by the post-mobile era, the Company will actively respond, build on
its existing advantages, continue to consolidate core competitiveness, actively expand existing business, and actively lay out new
product and business directions to achieve sustained and healthy development of the Company.
In terms of industry competitive pattern, the concentration trend in the global technology and consumer electronics industries is
expected to continue. In the post-mobile era, massive investment in technological innovation and R&D is required for the development
of smart hardware products, for which the "soft power" of the ecosystem, such as developer base, user base, software applications,
entertainment content, community loyalty and data monetization, becomes more and more important. The leading companies with
capital, talent, technology and ecosystem advantages are expected to strengthen their competitive advantages, so as to lead technology
and product innovation in the industry.
In terms of the supply chain, the electronic manufacturers in China are strengthening their overall competitiveness. These manufacturers
are expected to better meet the needs of electronic product manufacturing in the post-mobile era and gain new opportunities of
development. However, it should also be noted that the changes in international political and economic landscapes, especially the
relationship between major countries, may have a significant impact to pattern of the industrial supply chain. To which, manufacturers
need to pay more attention and respond carefully and scientifically.
2. Strategy for future development
Looking into the future, the Company will actively respond to the innovation-driven development strategy, promote the upgrade of
industrial structure, strengthen technological innovation, and accelerate the development of a modern industrial system. It will seize
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Full Text of Goertek Inc. Annual Report 2023
the opportunities presented by the post-mobile era, actively track the development trends of advanced technologies such as 5G, AI,
IoT, and cloud computing, and closely follow the evolution and application of AI technologies. It will continuously deepen its presence
in the fields of emerging smart hardware and precision components, strengthen strategic partnerships with leading global clients, and
fulfill its economic and social responsibilities, thus to achieve stable and healthy growth of enterprise value in return for shareholders.
(1) Actively grasp the new opportunities in the post-mobile era, and further promote the Company's strategy of "precision components
+ smart hardware". Continue to strengthen the competitiveness of precision components and smart hardware products, and actively
develop the business related to next-generation smart hardware products. Utilize the synergy between the Company's component
business and system device business, continue to strengthen the core capabilities in precision and intelligent manufacturing, create a
Goertek Production System for the future intelligent manufacturing era, and provide clients with first-class vertically integrated product
solutions and "one-stop" R&D and manufacturing services.
(2) Continue the key-account strategy, remain client-oriented, maintain good relationships with core clients, and utilize the Company's
advantages in client resources. Focus on serving leading clients in the global technology and consumer electronics industry, and
continue to consolidate long-term strategic cooperation with clients. Closely follow the strategical planning and development of world-
class clients, and to create a global system of R&D, manufacturing and sales services accordingly. Continue to satisfy our clients with
our business, technology, engineering, operation and delivery services, in order to achieve win-win cooperation and to grow with the
world-class clients.
(3) Adhere to technological innovation and continue to invest in R&D. Constantly improve the Company's technical competitiveness
in acoustics, optics, microelectronics, microdisplay, precision manufacturing, automation, IT technology, software algorithms, etc., to
build the core technical competitiveness for future development. Firmly implement the talent strategy by recruiting outstanding
personnel in management and technology fields around the world, build and effectively motivate a first-class talent team, thus to
provide sufficient talents for future development of the Company.
(4) Constantly improve corporate governance and management, and promote the standardized and efficient internal operation.
Continuously improve the internal structure, processes and internal management system. Strengthen the awareness of lean operation,
improve the level of lean operation and seek benefits from it. Being market-oriented and client-oriented, continues to push forward
internal reform and innovation, and to build core competitiveness upon continuous reform and innovation activities. Continuously
enhance the digitalization and informatization of internal operations management, and actively explore the application of big data and
artificial intelligence technologies in operations. Create an excellent corporate culture, undertake the core values of "client orientation,
employee development, trustworthy, cooperation and mutual benefits", and earnestly fulfill economic and social responsibilities, to be
a great company.
3. Business operation during the reporting period and business plan for next year
During the reporting period, the Company carried the "precision components + smart hardware" strategy, remained client-oriented, and
focused on key accounts. By leveraging the synergy between the components business and system device business, the Company
completed various important tasks such as business expansion, project delivery, and operation improvement. The Company's
management team strengthened its crisis management awareness and actively carried out work to continuously promote client
orientation and client service capabilities, achieving positive results. The Company continued to promote organizational changes and
operational management improvements, maintain efficient internal decision-making operations, and improve internal operational
management levels, laying a solid management and operational foundation for future long-term development. The Company continued
to invest in R&D and technological innovation, completed more patent applications and gained more patent approvals, strengthened
the capabilities of R&D and talent team, and further strengthened the core competitiveness of the Company. The Company's revenue
and profitability declined to a certain extent during the reporting period due to a combination of factors, including sluggish overall
demand in the consumer electronics industry, declining shipments of VR and other smart hardware products, and changes in the
Company's business structure. Despite the short-term pressure on its performance, the Company's core competitiveness and industry
position remained strong. These temporary setbacks will not undermine the Company's foundation for stable development nor alter the
overall trend of its long-term, healthy growth.
Looking into the year of 2024, the Company still faces many challenges due to weak recovery of global economy and the complexities
in the external environment. However, there are new business opportunities in the global technology and consumer electronics industry.
The application areas of emerging smart hardware products are constantly expanding, the software and hardware ecosystem is
continuously being improved, and the integrated development of emerging smart hardware and AI technologies bring new opportunities
to the industry. The management and the staff of the Company will continue to implement our strategy and to achieve business
objectives, so as to return the shareholders with good business performance and continuous growth of the value of the Company.
(1) Maintain strategic focus and grasp development opportunities
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Full Text of Goertek Inc. Annual Report 2023
The Company will seize the business opportunities of smart hardware products in the post-mobile era by adhering to the "precision
components + smart hardware" strategy and utilize the synergy between the components and system device business. The Company
will further expand the business of smart hardware products by virtue of its core technological capabilities and advanced product
solutions in the field of precision components. And through that business development, the Company will create more applications and
demand for the precision components. By integrating the core capabilities in precision manufacturing and intelligent manufacturing,
the Company will be able to provide first-class "one-stop" R&D and manufacturing services to global clients
(2) Adhere to the client orientation philosophy and key-accounts strategy, identify and serve strategic clients
Follow the strategy and business plan of core clients, the Company will carry out corresponding business, products and capacity plans,
work with the client in their frameworks and schedules and provide industry-leading R&D and manufacturing services. The Company
will continuously build excellent client service team to satisfy our clients in long term in all aspects of business, technology, engineering,
operation, and delivery, to enhance client loyalty and satisfaction, and achieve mutual benefits cooperation with clients.
(3) Empower business expansion and create new opportunities
Based on the integration of the existing business advantages in precision components and smart hardware products, the Company will
further explore new directions and opportunities. By grasping the opportunities in precision optical components and modules, sensors,
microsystem modules, VR, MR, AR, smart wearables, and other products, the Company will secure the key projects to obtain core
clients and follow up with new opportunities in automotive electronics, microdisplay, and other fields as well.
(4) Improve lean operation and complete successful delivery of key projects
The Company will constantly promote the idea of lean operation to improve the level of operation and to support the business objectives
with high-quality and efficient operation. The Company will actively build the Goertek Production System, a new intelligent
manufacturing model that meets future market needs. The Company will make thorough planning of its resources, ensure the delivery
of key projects that closely related to the strategy and the business objectives, and to achieve the goals of the Company.
(5) Continue to invest in independent R&D and technological innovation, strengthen core competitiveness with talent strategy
The Company will continue to invest in R&D and technological innovations centered on future strategic directions, and strengthen the
technical capabilities in the fields of acoustics, optics, microelectronics, microdisplay, precision and intelligent manufacturing. The
Company will integrate the managerial and technical talents globally, keep bringing in high-level talents, carry out solid efforts in the
selection, cultivation, motivation and retention of talents, and to support the Company's strategic implementation and business
development with high-quality talent echelon.
(6) Effectively control risks and maintain healthy operation
The Company will continue to maintain a sound business strategy, strengthen risk awareness, pay close attention to changes in the
external environment, perform effective control on risk indicators in production operation of the Company, take the initiative to identify
and resolve potential risks, and ensure sustainable development of production and operation activities.
4. The demand and planning of fund
The Company maintains a healthy asset and liability structure, and obtained a good long-term cooperative relationship with banks and
other major financial institutions. In 2024, the Company will continue to improve the management of cash, optimize payment terms,
control capital expenditure and enhance the efficiency of fund. The Company will carefully evaluate various financing tools to optimize
the asset-liability ratio and debt structure and carefully manage financial derivatives trading activities with strict standards, to actively
avoid liquidity risks and foreign exchange risks. And with all the measures above, to thus provide stable and sufficient financial support
to the development of the Company.
5. Future risks
(1) Macroeconomic risks
Global economy has yet to recover. Inflation remains high in major European and American countries. Unfavorable factors that
affecting investment and consumption still exist, which may hinder the development of the global technology and consumer electronics
industry in the short term. The world political and economic situation remains complex. Trade disputes between major countries and
geopolitical events have brought uncertainties to the global economy, which may adversely affect the business of the Company. Some
intelligent hardware products, such as smartphones, have slowed down or stagnated in growth rate, and some next-generation smart
hardware products may develop slower than expected. This may impact the global market demand as well as the Company's business
performance.
(2) Operational risks
① Risks of relatively concentrated clients
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Full Text of Goertek Inc. Annual Report 2023
The competitive pattern of global technology and consumer electronics industry, along with the Company's business model and key
account strategy, determined a relatively concentrated client structure. As a result, the business income from a few core clients accounts
for a large proportion of the Company's overall income. Although the above clients are global industry leaders who have significant
competitive advantages and market position, and have maintained long-term and stable cooperative relations with the Company, under
some special circumstances, they may bring fluctuations and risks to the Company's business if their business activities fluctuate, or
their relationship with the Company changes.
② Risks of exchange rate fluctuation
Exports constitute a significant portion of the Company's total income. At the same time, the Company also imports a considerable
number of raw materials, equipment and other products from overseas. These import and export businesses are primarily settled in US
dollars. Although the Company has adopted appropriate risk hedging tools, the significant fluctuation of foreign exchange rates may
still bring certain exchange rate risks to the Company.
③ Risks of loss of core technical talents
The technology and consumer electronics industry is a talent intensive industry. Therefore, the demand for core technical talents is
strong, and the competition for talents is very fierce. Core technical talents are the key resources for the Company to continuously
improve its core competitiveness and realize long-term development. For this reason, the Company will continue to improve various
incentive and restraint mechanisms in order to retain core technical talents. Under fierce competition, there may still be the loss of core
technical talents, which may put the Company at a disadvantage in the competition and affect the business development.
(3) Risks of management
In recent years, the Company's various product lines have expanded rapidly, leading to a larger business scale and a wider range of
products. This has placed higher demands on the Company's overall operational and management capabilities. The Company
implements the strategic plan of developing core client business and exploring new opportunities, which requires the Company's
management to maintain excellent abilities of judgment, execution and management. If the Company's management fails to match the
business growth, or fails to be improved to meet the needs of the Company's development, it may affect the execution of strategic
planning and the delivery of business objectives, thus bringing management risks to the Company.
Ⅻ. Reception, research, communication, interview and other activities during the reporting
period
Applicable Not applicable
Main content of
Reception Reception Type of Type of discussion and
List of attendees Index of related information
time place communication attendees information
provided
Investors attending
The Company's The record of investor
the Company's
April 21, The overall operation relations activities published
Other Other performance
2023 Company and business on www.cnifo.com.cn on
presentation meeting
development April 21, 2023
of 2022
Investors attending The Company's The record of investor
May 10, The the Company's 2022 overall operation relations activities published
Field research Other
2023 Company annual general and business on www.cnifo.com.cn on
meeting development May 10, 2023
XIII. Implementation of the Action Plan for Improving Quality and Investor Returns
Has the Company disclosed the Action Plan for Improving Quality and Investor Returns?
Yes No
In line with the guidelines outlined in the conference of the Political Bureau of the Central Committee of the CPC and the State Council
executive meeting to invigorate the market and boost investor confidence, and to safeguard the interests of all shareholders, the
Company has formulated the Action Plan for Improving Quality and Investor Returns. The specific measures and progress of the
Company's implementation are as follows:
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Full Text of Goertek Inc. Annual Report 2023
1. Focus on the main business, create value for shareholders, and take actions to feedback the society
The Company's main businesses include precision components business, smart audio devices business, and smart hardware business.
The Company serves the leading global clients in the technology and consumer electronics industry by providing them with vertically
integrated products of precision components and smart hardware, as well as related design, R&D, and manufacturing services.
Driven by the mission of "A better life enriched by technology", the Company is committed to creating value for all shareholders and
the society. After more than 20 years of development, the Company has built industry-leading precision manufacturing and intelligent
manufacturing capabilities. In terms of internal management, the Company builds a strong management team that ensures efficient
internal decision-making and maintains a high level of lean operations. In terms of external cooperation, the Company has long-term
strategic cooperation with industry-leading clients and has stable relationships with them.
Looking into the future, the Company will focus on its main business, actively respond to the innovation-driven development strategy,
actively track the development trends of advanced technologies such as 5G, AI, IoT, and cloud computing. It will continuously deepen
its presence in the fields of emerging smart hardware and precision components, strengthen strategic partnerships with leading global
clients, and fulfill its corporate economic and social responsibilities. Through the Company's stable and healthy growth, it will
maximize enterprise value and shareholder returns. The Company will always strive to create value for its shareholders while feeding
back the society.
2. Continue to strengthen technological innovation capabilities and build industry-leading core competitiveness
Technological innovation is the driving force behind business growth. It is at the forefront of the Company's agenda. The Company
attaches great importance to the integration and cultivation of outstanding talents in the fields of acoustics, optics, microelectronics,
wireless communication, precision manufacturing, automation, and other sectors around the world. The Company has set up a team of
technical talents with profound technical strength and rich experience in product projects and has made long-term cooperation with
many well-known universities and scientific research institutions, forming an open and comprehensive technology R&D platform in
support of continuous innovation and R&D of technologies and products. As of December 31, 2023, the Company has totally applied
for 32,209 patents, including 4,031 foreign patent applications and 17,896 invention patents applications; a total of 19,905 patents have
been granted, including 6,809 invention patents.
Looking ahead, the Company will continue to invest in R&D and technological innovations centered on future strategic directions, and
strengthen its technical capabilities in the fields of acoustics, optics, microelectronics, microdisplay, precision manufacturing, and
intelligent manufacturing. The Company will integrate the managerial and technical talents globally, keep bringing in high-level talents,
carry out solid efforts in the selection, cultivation, motivation and retention of talents, and to support the Company's strategic
implementation and business development with high-quality talent echelon.
3. Continue to improve corporate governance, business management, and lean operation levels
The Company will continue to standardize the governance mechanisms of "General meeting, Board of Directors, Supervisory Board,
and senior management" to improve the level of corporate governance, continuously improve the internal control system, and solidify
the foundation of internal governance. The Company will clearly define its rights and obligations, as well as those of its shareholders
to prevent the abuse of shareholder rights or the exploitation of the management's dominant position, which could harm the interests
of minority investors. The Company will encourage the active participation of minority investors in general meetings, facilitate the
involvement of various types of investors in decision-making on major matters, and enhance investors' influence and satisfaction. The
Company will continue to strengthen its internal control system and enhance risk management to improve decision-making capabilities.
This will create a virtuous cycle for the Company's development and provide strong protection for the legitimate rights and interests of
the shareholders.
In the face of a complex and ever-changing market landscape and industry trends, the Company's management team will further
enhance its operational management capabilities, uphold its client orientation approach, and strengthen business expansion to
continuously cultivate new growth drivers. The Company will continuously enhance its lean operations capabilities to drive efficiency
and support the achievement of its business objectives. The Company will continue to maintain a sound business strategy, strengthen
risk awareness, and take the initiative to identify and resolve potential risks to ensure the sustainable development of its production
and operational activities.
4. Actively repurchase shares to enhance investor confidence
Based on the unwavering confidence in the Company's future development and the recognition of its long-term value, the Company
has initiated a share repurchase plan to further enhance its long-term incentive mechanism. This move aims to effectively align the
interests of shareholders, the Company, and its core team, thereby fostering sustainable growth and reinforcing investor confidence.
On October 26, 2023, the Company's Board of Directors held the 10th meeting of the 6th Board of Directors. During the meeting, the
Proposal on the Repurchase of Company Shares through Continuous Trading Approach was reviewed and approved. The Company
is authorized to use its own funds to repurchase a portion of its outstanding A-shares through continuous trading approach. These
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repurchased shares will be utilized for future employee stock ownership plans or stock option incentive plans. The total amount of
funds allocated for the repurchase shall not be less than RMB 500 million (inclusive) and not exceed RMB 700 million (inclusive).
The repurchase price per share shall not exceed RMB 25.49 (inclusive). The repurchase period shall extend for 12 months from the
date of the Board of Directors' approval of the repurchase plan.
The Company initiated the above-mentioned stock repurchase on November 16, 2023, through continuous trading approach via the
special securities repurchase account. As of December 31, 2023, the Company had repurchased a total of 9,632,700 shares through
continuous trading approach with the specific securities repurchase account, representing 0.28% of the Company's total outstanding
shares. The repurchase cost was RMB 177,637,427.00 (excluding transaction fees). As of the reporting date of this report, the Company
has repurchased 34,205,700 shares through continuous trading approach via the specific securities repurchase account, accounting for
1.00% of the total share capital of the Company. The repurchase cost is RMB 596,685,920.70 (excluding transaction costs).
5. Increase cash dividends and enhance investor returns
Shareholder returns are a top priority for the Company. The Company has strictly implemented the Shareholder Return Plan for the
Next Three Years (2022-2024), and clarifies the standard, ratio, and the decision-making procedures of the distribution policy, which
ensures the continuity and stability of the profit distribution policy, in order to fully protect the legitimate rights and interests of minority
investors. From 2021 to 2023, the Company's cumulative cash dividends reached RMB 1.509 billion, accounting for 51.01% of the
average annual net profit from 2020 to 2022. In addition, to demonstrate its confidence in long-term growth, the Company has
conducted multiple share repurchases. Between 2021 and 2023, the total repurchase amount reached RMB 2.178 billion.
In 2024, the Company's proposed profit distribution plan for the year 2023 is as follows: based on the total share capital registered on
the record date of equity distribution minus the repurchased shares in the Company's specific securities repurchase account, the
Company will distribute cash dividend of RMB 1.00 (tax inclusive) for per 10 shares to all the shareholders, as well as 0 bonus shares
(tax inclusive), and there is no conversion of capital surplus into share capital. Although the Company experienced a certain degree of
decline in revenue and net profit during the reporting period, it continued its consistent cash dividend payout to enhance shareholder
returns.
In the future, the Company will continue to prioritize investors, striving to enhance shareholder returns and fulfill its obligations as a
publicly listed entity. It remains dedicated to the strategy of 'improving quality and investor returns,' focusing on main business,
fostering sustainable growth, and elevating corporate governance standards. These efforts aim to bolster investor confidence and
contribute positively to market stability and sentiment.
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Section IV Corporate Governance
Ⅰ. Corporate Governance in Practice
During the reporting period, the Company continuously improved the corporate governance structure, the internal management and
control system, and continued to carry out corporate governance activities in strict accordance with the requirements of relevant laws,
regulations and normative documents such as the Company Law, the Securities Law, Code of Corporate Governance for Listed
Companies, Rules Governing the Listing of Shares on Shenzhen Stock Exchange as well as with relevant documents of China Securities
Regulatory Commission and the relevant instructions of Shandong Securities Regulatory Bureau, so as to further standardize the
Company's operation and improve the level of corporate governance.
During the reporting period, the Company has comprehensively reviewed its relevant corporate governance policies per the latest
requirements of the Opinions of the General Office of the State Council on Reforming the Independent Director System of Listed
Companies, the Measures for the Administration of Independent Directors of Listed Companies, No 3 Guideline for Supervision of
Listed Companies - Cash Dividend Distribution of Listed Companies, and the Guidelines for Articles of Association of Listed
Companies. In combination with the Company's actual situation and business development needs, the Company had revised more than
10 rules and regulations, including the Articles of Association and the Working System for Independent Directors.
By the end of the reporting period, the actual practice of corporate governance met the relevant requirements of the above laws,
administrative regulations, departmental rules and normative documents on the governance of listed companies, and no documents
concerning administrative supervision measures taken by the regulatory authorities was received.
As of the end of the reporting period, the Company's corporate governance practices complied with the relevant regulatory requirements
issued by the China Securities Regulatory Commission (CSRC). The details are as follows:
1. Shareholders and general meetings: The Company convened and held general meetings in strict accordance with the Rules for the
General Meetings of Listed Companies and the Company's Rules of Procedure of General Meetings, so as to ensure that all shareholders,
especially minority shareholders, enjoy equal status and fully exercise their rights. In addition, lawyers were engaged to witness the
legitimacy of the convening, holding and voting procedures of each general meeting of shareholders.
2. The Company and controlling shareholders: The Company, with independent business and operation autonomy, is independent of
the controlling shareholders in business, personnel, assets, organizations and finance. The Board of Directors, Supervisory Board and
internal institutions of the Company operate independently. The Company's controlling shareholder strictly regulates its own behavior,
and there was no direct or indirect interference with the Company's operations and decision-making beyond the general meeting of
shareholders.
3. Directors and the Board of Directors: The Company elects directors in strict accordance with the election and appointment procedures
stipulated in the Articles of Association. There are three independent directors in the Board, the number of directors and the composition
of the Board of Directors meet the requirements of laws and regulations and the Articles of Association. All directors of the Company
carried out their work per the Rules of Procedure of the Board of Directors and Working System for Independent Directors". They
attended the Board of Directors and general meetings, participated in relevant knowledge training, and were familiar with relevant laws
and regulations.
4. Supervisors and the Supervisory Board: The election of supervisors and the composition of the Supervisory Board were in strict
accordance with relevant provisions of the Company Law and Articles of Association. The Company's supervisors strictly followed the
Rules of Procedure of the Supervisory Board. They diligently carried out their responsibilities, effectively overseeing and providing
independent opinions on the Company's major affairs, related party transactions, financial status, and the performance of directors and
managers.
5. Performance evaluation and incentive-restraint mechanism: The Company has gradually improved its fair and transparent
performance evaluation standards and incentive and restraint mechanism for directors, supervisors and senior management. The
appointment of Company's senior management is open and transparent, and in line with the provisions of laws and regulations.
6. Stakeholders: The Company fully respects and safeguards the legitimate rights and interests of stakeholders, actively engages in
communication and collaboration with them to achieve a balanced alignment of societal, shareholder, corporate, and employee interests.
This collective effort drives the Company's sustained and robust development.
7. Information disclosure and investor relations: The Company duly performed the disclosure obligations in accordance with the
provisions of Rules Governing the Listing of Shares on Shenzhen Stock Exchange, Articles of Association and Investor Relations
Management Rules, and discloses information as per the law, so as to ensure that the information disclosure is true, accurate, complete,
timely, fair, concise, clear, free from false statement, misrepresentations and material omissions. All shareholders were given equal
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access to the information. The Company has formulated and continuously renewed the Insider Information Management Rules, further
improved insider information management, strengthened the confidentiality of insider information, maintained the fair principle of
information disclosure, and protected the legitimate rights and interests of investors. The Company has designated the Board Secretary
as the person in charge of the Company's investor relations management, responsible for managing the Company's information
disclosure and investor relations, as well as investor reception and consultations. The Company has designated Securities Times, China
Securities Journal, Shanghai Securities News, Securities Daily, and CNINFO (http://www.cninfo.com.cn) as the Company's
information disclosure media. In 2023, the Company disclosed over 160 announcements to reveal its financial statements, operating
information and other significant matters to shareholders and the public in a timely manner. Meanwhile, the Company has launched a
special column for investor relations on its official website and answers investors' questions through interactive platforms such as
Hudongyi of the Shenzhen Stock Exchange (http://irm.cninfo.com.cn) and the Company's investors' hotline assisting the investors in
understanding the Company, successfully establishing a fair and effective communication bridge between the Company, its investors,
and the public.
Whether there is any significant difference between actual situation of corporate governance and laws, administrative regulations and
the provisions on governance of listed companies issued by CSRC
Yes No
There is no significant difference between the actual situation of corporate governance and the laws, administrative regulations and the
provisions on governance of listed companies issued by CSRC
Ⅱ. Particulars about the independence of the Company from controlling shareholder and
actual controller in terms of the assets, personnel, finance, organization and business
The Company has the capability of self-operation in its marketing, production, procurement, etc., and does not depend on major
shareholders or affiliated enterprises. The ownership of the assets is clear and belongs to the Company. There is no mixed operation
with major shareholders. The Company is completely separated from the controlling shareholders in terms of business, personnel,
assets, organization, and finance. The Company has an independent and complete business, as well as the capability of self-operation.
1. Business independence: The Company had its own production, procurement and sales system, and was completely independent of
controlling shareholder in terms of business.
2. Personnel separation: There is a department responsible for the Company's labor, personnel and salary management. Rules and
regulations have been established for assessment of employees' performance. Personnel of the Company were independent from the
controlling shareholder. The Senior Management of the Company did not hold any positions other than director and supervisor in the
related shareholders and other entities with same or similar business.
3. Institutional independence: The Board of Directors, Supervisory Board, Senior Management and other internal organization of the
Company operated independently, and each functional department is completely independent from controlling shareholder in terms of
authority, personnel, production operation premises, etc, and there is no subordinate relationship between the controlling shareholder
and its functional departments.
4. Asset independence: The ownership of the assets between the Company and the controlling shareholder was clear. The Company
has its independent and complete production system, auxiliary production system and supporting facilities, as well as land use rights,
housing property rights, intellectual property rights, and other assets.
5. Financial independence: The Company has its own separate financial department and an independent accounting system and financial
management system from the controlling shareholder. The Company makes financial decisions on its own according to the
requirements of relevant accounting systems of listed companies. The Company implements vertical management of the financial
affairs of its subsidiaries. The Company opened accounts in the bank independently, made tax declarations, and performed tax
obligations independent of shareholders according to law.
Ⅲ. Horizontal Competition
Applicable Not applicable
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Ⅳ. Annual General Meeting and Extraordinary General Meeting held during the Reporting
Period
1. General meeting of shareholders during the reporting period
Percentage of Convening
Session Type of meeting Disclosure date Meeting resolution
investor participation date
For details, refer to the Announcement of
Resolutions of the 2022 Annual General
Annual general
General meeting of Meeting published by Securities Times,
meeting of 28.09% May 10, 2023 May 11, 2023
shareholders of 2022 China Securities Journal, Shanghai
shareholders
Securities News, Securities Daily, and
CNINFO (http://www.cninfo.com.cn)
For details, refer to the Announcement of
the Resolution of the 1st Extraordinary
The first
Extraordinary General Meeting in 2023 published by
extraordinary general
general meeting of 28.60% August 8, 2023 August 9, 2023 Securities Times, China Securities
meeting of
shareholders Journal, Shanghai Securities News,
shareholders in 2023
Securities Daily, and CNINFO
(http://www.cninfo.com.cn)
Note: The percentage of investor participation refers to the percentage of the number of shares held by the participating investors to
the total share capital of the Company.
2. Extraordinary general meeting of shareholders requested by the Preference shareholders with voting
rights restored
Applicable Not applicable
V. Directors, Supervisors and Senior Management
1. Basic Information
Number Number
Number of of shares of shares Number of Reason
shares held at increased decreased Other shares held for
Appointment Term start Term end
Name Gender Age Position the beginning during during increase/decrease at the end of change
status date date
of the the the (shares) the period in
period(shares) period period (shares) shares
(shares) (shares)
July 27, November
Jiang Bin Male 58 Chairman Incumbent 287,397,406 287,397,406
2007 14, 2025
November November
Director Incumbent
15, 2022 14, 2025
April 7, November
Li Youbo Male 47 President Incumbent
2023 14, 2025
Appointments June 2, April 7,
Vice President
and Removals 2021 2023
February November
Director Incumbent
Duan 4, 2016 14, 2025 3,474,500 3,474,500
Male 48
Huilu March 25, November
Vice President Incumbent
2011 14, 2025
Liu May 10, November
Male 51 Director Incumbent
Yaocheng 2023 14, 2025
Independent November November
Wang Kun Female 48 Incumbent
Director 8, 2019 14, 2025
Huang Independent November November
Female 59 Incumbent
Yidong Director 15, 2022 14, 2025
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Number Number
Number of of shares of shares Number of Reason
shares held at increased decreased Other shares held for
Appointment Term start Term end
Name Gender Age Position the beginning during during increase/decrease at the end of change
status date date
of the the the (shares) the period in
period(shares) period period (shares) shares
(shares) (shares)
Jiang Independent November November
Male 55 Incumbent
Fuxiu Director 15, 2022 14, 2025
Chairman of
Feng November November
Male 56 Supervisory Incumbent
Pengbo 15, 2022 14, 2025
Board
Employee
Xu September November
Female 47 representative Incumbent
Xiaofeng 17, 2013 14, 2025
Supervisor
Employee
Wei April 27, November
Male 46 representative Incumbent
Wenbin 2021 14, 2025
Supervisor
Gao April 12, November
Male 48 Vice President Incumbent
Xiaoguang 2012 14, 2025
October November
Liu Chunfa Male 48 Vice President Incumbent 864,000 864,000
10, 2013 14, 2025
Jiang October November
Male 54 Vice President Incumbent
Hongzhai 10, 2013 14, 2025
October November
Yu Dachao Male 46 Vice President Incumbent
24, 2016 14, 2025
April 7, November
Rao Yi Male 41 Vice President Incumbent
2023 14, 2025
Chief Financial January November
Li Yongzhi Male 46 Incumbent
Officer 27, 2021 14, 2025
Board April 23, November
Xu Dapeng Male 40 Incumbent
Secretary 2023 14, 2025
Director and July 27, April 6,
Resigned
Vice Chairman 2007 2023 250,345,197 250,345,197
Jiang Long Male 50
October April 6,
President Resigned
30, 2014 2023
Kazuyoshi October March 7,
Male 57 Vice President Resigned
Yoshinaga 24, 2016 2023
Vice President,
October April 22,
Jia Jun'an Male 53 Board Resigned 800,000 800,000
10, 2013 2023
Secretary
Total - - - - - - 542,881,103 542,881,103 -
Whether there is any resignation of directors, supervisors and senior management during the reporting period
Yes No
During the reporting period, Director, Vice Chairman and President Jiang Long, Vice President Kazuyoshi Yoshinaga and Vice
President and Board Secretary Jia Jun'an were dismissed for personal reasons.
Changes in directors, supervisors and senior management
Applicable Not applicable
Name Position Type Date Reason
Kazuyoshi Yoshinaga Vice President Dismissal March 7, 2023 Personal reason
Director and Vice
Resigned April 6, 2023 Personal reason
Jiang Long Chairman
President Dismissal April 6, 2023 Personal reason
Appointments and There was a change in position
Li Youbo President April 7, 2023
Removals from Vice President to President
44
Full Text of Goertek Inc. Annual Report 2023
Name Position Type Date Reason
during the reporting period.
Appointed as the Vice President of
Rao Yi Vice President Appointment April 7, 2023
the Company
Board Secretary, Vice
Jia Jun'an Dismissal April 22, 2023 Work arrangement
President
Appointed as the Board Secretary
Xu Dapeng Board Secretary Appointment April 23, 2023
of the Company
Elected as a non-independent
Liu Yaocheng Director Elected May 10, 2023 director of the 6th Board of
Directors of the Company
2. Biographical Information
Professional backgrounds, main working experience and current duties of the Directors, Supervisors and the Senior Management
(1) Members of the Board of Directors of the Company
Jiang Bin, male, Chinese citizen with no foreign residency rights, was born in September 1966. He holds a master's degree in business
administration from Tsinghua University and a bachelor's degree in electronic engineering from Beihang University. Mr. Jiang
currently serves as the Chairman of the Board of the Company, which he founded in 2001. With over 30 years of experience in the
electro-acoustic industry, he also holds positions as a deputy to the 14th National People's Congress, a standing member of the 13th
Executive Committee of the All-China Federation of Industry and Commerce, and the Executive Director of the China Virtual Reality
Industry Association. Mr. Jiang has been honored with titles such as National Model Worker, Model Worker in Shandong Province,
National Leading Entrepreneur in the Electronic Information Industry, Industry Leading Entrepreneur in Shandong Province, and
Outstanding Figure in Shandong Province. Additionally, he has received the Highest Award in Science and Technology in Shandong
Province.
Li Youbo, male, Chinese citizen with no foreign residency rights, was born in December 1977. He holds a bachelor's degree in
automation from Dalian University of Technology. Mr. Li currently serves as a Director and President of the Company. He joined the
Company in 2003 and has held various positions including engineer, technical manager, head of the business division, and Vice
President. He has nearly 20 years of experience in the R&D and manufacturing of electro-acoustic components and complete machines.
Duan Huilu, male, Chinese citizen with no foreign residency rights, was born in February 1976. He holds a bachelor's degree in
accounting from Shandong University of Finance and Economics. Mr. Duan currently serves as a director and Vice President of the
Company. He joined the Company in 2001 and has held various positions including accountant, financial manager, manager of the
finance department, and Chief Financial Officer. He has more than 20 years of experience in enterprise finance.
Liu Yaocheng, male, Chinese citizen with permanent residency in the United States, was born in October 1973. He holds a Ph.D. in
materials science and engineering, a master's degree in electronic engineering from Stanford University, and master's and bachelor's
degrees in materials science and engineering from Tsinghua University. Mr. Liu currently serves as the director of the Company. He
joined the Company in 2019 and has held various positions, including head of the Company's Strategy and Investment Department and
head of the Company's Central Research Institute. Mr. Liu has worked at IBM semiconductor R&D center, McKinsey & Company,
and Silex Microsystems AB, gaining extensive experience in technology R&D, strategic planning, investment, and M&A.
Wang Kun, female, Chinese citizen with no foreign residency rights, was born in April 1976. She holds a Ph.D. in accounting from the
Hong Kong University of Science and Technology and a bachelor's degree in accounting from Nankai University. Currently, she serves
as an associate professor in the Department of Accounting at Tsinghua University's School of Economics and Management.
Additionally, she holds the positions of deputy director and senior research fellow at the Research Center for Corporate Governance at
Tsinghua University. She also serves as an independent director for the Company, China International Futures Co., Ltd., and LUSTER
LightTech Co., Ltd. Previously, she worked as a lecturer and director of doctoral programs in the Department of Accounting at Tsinghua
University's School of Economics and Management. She also held positions as an independent director for Beijing Thunisoft Co., Ltd.
and Integrated Electronic Systems Lab Co., Ltd. She has won the Excellence in Teaching Award of the School of Economics and
Management of Tsinghua University for several times and has rich experience in finance and auditing.
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Huang Yidong, female, Chinese citizen with permanent residency in Japan, was born in March 1965, with a Ph.D. in electronic
engineering from Tsinghua University. She is currently a professor in the Department of Electronic Engineering at Tsinghua University,
deputy director of the academic committee at Tsinghua University, foreign academician of the National Academy of Engineering, and
fellow of the OSA. She is also the executive director of the Chinese Optical Society, vice chairman of the China Education Society of
Electronics, vice president of the Branch of China Association of Higher Education, deputy editor-in-chief of ACS Photonics, and
independent director of the Company and Advanced Fiber Resources (Zhuhai), Ltd. She formerly served as a distinguished researcher
at the NEC Institute of Optical-Wireless Devices, the deputy dean and head of the Department of Electronic Engineering of Tsinghua
University, and the dean of the Tianjin Institute of Electronic Information of Tsinghua University.
Jiang Fuxiu, male, Chinese citizen with no foreign residency rights, who was born in June 1969, served as a postdoctoral fellow in
accounting at Guanghua School of Management, Peking University, and has a Ph.D. in economics from Nanjing University. He is
currently a professor and doctoral supervisor in the Department of Finance, Business School of Renmin University of China and a
director of the Environmental, Social and Governance (ESG) Research Center of the National Academy of Development and Strategy
of Renmin University of China. He also serves as an independent director of the Company. He used to serve as an independent director
of Beijing Chunju Technology Co., Ltd., Northcom Group Co., Ltd., Yantai Longyuan Power Technology Co., Ltd., Utour Group Co.,
Ltd., Datang International Power Generation Co., Ltd., etc.
(2) Members of the Board of Supervisors of the Company
Feng Pengbo, male, Chinese citizen with no foreign residency rights, was born in July 1968. He holds a bachelor's degree in mechanical
manufacturing technology and equipment from the Xi'an University of Technology and the professional title of Senior Engineer, and
has won the honor of model worker in Shandong Province. He is currently the chairman of the Board of Supervisors of the Company.
Mr. Feng joined the Company in 2003 and successively served as an engineer, chief engineer, section supervisor, section chief, and
vice president of the Company. Mr. Feng is an expert in automation and has rich experience in automation equipment R&D and
manufacturing.
Xu Xiaofeng, female, Chinese citizen with no foreign residency rights, who was born in October 1977, holds a bachelor's degree in
electrical technology from Zhengzhou Institute of Aeronautical Industry Management and a bachelor's degree in business
administration from China University of Petroleum. She is currently a supervisor of the Company. Ms. Xu joined the company in 2001,
and successively served as the assistant manager of the quality control department, the enterprise development department, and the
operation department, and the head of the Company's employee service center. She has rich experience in enterprise management.
Wei Wenbin, male, Chinese citizen with no foreign residency rights, was born in July 1978. He holds a bachelor's degree in material
shaping and control engineering from Jilin University. He is currently a supervisor and the general manager of the Human Resources
Department of the Company. Mr. Wei joined the Company in 2004, and successively served as the head of the company's production
and operation management department, human resources management department, lean manufacturing management department,
employee management, etc.
(3) Senior management of the Company
Li Youbo (Please refer to the above.)
Liu Chunfa, male, Chinese citizen with no foreign residency rights, was born in October 1976. He graduated from Lanzhou Railway
College, majoring in mechatronics. He is currently a Vice President of the Company. Mr. Liu joined the Company in 1999. He
successively served as engineer and assistant manager of the R&D department, technical manager of the technical engineering
department, senior product manager, head of the manufacturing department, senior manager of the R&D department, head of the
business department, etc. Mr. Liu has over 20 years of experience in the field of electroacoustic components, especially in micro
speakers and receivers.
Jiang Hongzhai, male, Chinese citizen with no foreign residency rights, was born in December 1970. He graduated from Shandong
College of Information Technology with a major in computer application. Currently, he serves as a Vice President of the Company.
Previously, Mr. Jiang held positions as the factory director of Yuefeng Electronic Technology (Dongguan) Co., Ltd., and as an engineer
at Weifang Radio Eighth Factory. Mr. Jiang joined the Company in 2006 and successively served as deputy general manager of the
46
Full Text of Goertek Inc. Annual Report 2023
equipment department, head of the employee management department and the leader of subsidiaries' business, etc. Mr. Jiang has more
than 20 years of experience in the field of precision machining, and has rich experience in administration and infrastructure, etc.
Yu Dachao, male, Chinese citizen with no foreign residency rights, was born in May 1978. He holds a bachelor's degree in computer
science and engineering from Tianjin University of Technology. He is currently a Vice President of the Company. Mr. Yu joined the
Company in 2005 and successively served as the manager of R&D department, product manager, deputy general manager of the R&D
department, head of the business department, and head of the supply chain management department. He has extensive experience in
smart electronics development and supply chain management.
Gao Xiaoguang, male, Chinese citizen with no foreign residency rights, was born in March 1976. He holds a master's degree in business
administration from Southern Cross University, Australia. He is currently a Vice President of the Company. Mr. Gao joined the
Company in 2001 and has since held positions including manager, deputy general manager of the marketing department, deputy general
manager of the electroacoustic business department, and head of the marketing system. He has rich experience in market expansion,
key account management, human resource management, etc.
Duan Huilu (Please refer to the above.)
Rao Yi, male, Chinese citizen, was born in June 1983. He has a bachelor's degree in electronic science and technology from Tsinghua
University and economics from Peking University, and a master's degree in electronic science and technology from Tsinghua
University. He has a Ph.D. in optoelectronics from the University of California, Berkeley. He is currently the Vice President of the
Company and the head of the optics business. Mr. Rao joined the Company in 2019. He previously worked for Bandiwith10
Corporation and Rokid US in the United States. He has received several honorary titles, including the Science and Technology Youth
Award of Shandong Province and the Special Prize of Tianjin Science and Technology Invention. He has rich experience in the field
of virtual reality/augmented reality optics.
Li Yongzhi, male, Chinese citizen with no foreign residency rights, was born in November 1978. He holds a master's degree in business
management and a bachelor's degree in management from Hefei University of Technology. He is currently the Chief Financial Officer
and head of the accounting department of the Company. Mr. Li joined the Company in 2005 and successively served as accountant
and financial manager of the financial department. Mr. Li is a senior accountant and a certified management accountant (CMA) with
nearly 20 years of experience in corporate finance.
Xu Dapeng, male, Chinese citizen with no foreign residency rights, was born in November 1984. He holds a master's degree in
management from Renmin University of China and a bachelor's degree in economics from Hunan University. He currently serves as
the Board Secretary of the Company and holds the Board Secretary Qualification Certificate. Mr. Xu joined the Company in 2015 and
has successively worked in the Company's marketing system and securities department. He successively held the positions of marketing
director, securities affairs representative, etc. He has rich experience in the fields of marketing, securities finance, investor relations
management, etc.
Positions held in shareholders' entities
Applicable Not applicable
Receive remuneration
or allowance from
Name Entity Position Term start date Term end date
shareholders' entity
(Yes/No)
Goertek Group Co.,
Jiang Bin Chairman November 15, 2021 November 14, 2024 No
Ltd.
Goertek Group Co.,
Jiang Long Director November 15, 2021 November 14, 2024 No
Ltd.
Goertek Group Co.,
Duan Huilu Director November 15, 2021 November 14, 2024 No
Ltd.
Description of
incumbency in None
shareholders’ entities
47
Full Text of Goertek Inc. Annual Report 2023
Positions held in other entities
Applicable Not applicable
Receive remuneration
or allowance from
Name Entity Position Term start date Term end date
shareholders' entity
(Yes/No)
Weifang Goertek
Jiang Bin Chairman November 23, 2019 November 22, 2025 No
Electronics Co., Ltd.
Goertek Optical
Jiang Bin Chairman April 20, 2022 April 19, 2025 No
Technology Co., Ltd
Beijing Goertek
Executive
Jiang Bin Investment Management January 22, 2019 January 21, 2025 No
Director
Co., Ltd.
Weifang Goertek
Executive
Jiang Bin Education Investment Co., March 22, 2019 March 21, 2025 No
Director
Ltd.
Rongcheng Goertek
Jiang Long Chairman July 15, 2020 July 14, 2026 No
Technology Co., Ltd.
Jiang Long Goertek Electronics, Inc. Director May 1, 2020 April 30, 2026 No
Weifang Goertek
Jiang Long Director / CEO November 26, 2019 November 25, 2025 No
Electronics Co., Ltd.
Goertek Optical
Jiang Long Director / CEO April 21, 2022 April 20, 2025 No
Technology Co., Ltd
Goertek Technology Co., Executive
Jiang Long December 10, 2021 December 9, 2026 No
Ltd. Director / CEO
Goertek Intelligence Executive
Jiang Long August 18, 2020 August 17, 2026 No
Technology Co., Ltd. Director / CEO
Goertek Microelectronics
Jiang Long Chairman October 20, 2020 April 23, 2023 No
Inc.
Qingdao Goertek Executive
Jiang Long October 22, 2021 April 24, 2023 No
Intelligent Sensor Co., Ltd. Director
Weifang Goertek Executive
Jiang Long December 9, 2019 April 27, 2023 No
Microelectronics Co., Ltd. Director
Shanghai Goertek Executive
Jiang Long October 14, 2020 April 23, 2023 No
Microelectronics Co., Ltd. Director
Beijing Goertek Executive
Jiang Long August 7, 2020 May 11, 2023 No
Microelectronics Co., Ltd. Director
Wuxi Goertek Executive
Jiang Long August 7, 2020 April 27, 2023 No
Microelectronics Co., Ltd. Director
Shenzhen Goertek Executive
Jiang Long July 23, 2020 May 16, 2023 No
Microelectronics Co., Ltd. Director
Rongcheng Goertek Executive
Jiang Long November 1, 2021 April 26, 2023 No
Microelectronics Co., Ltd. Director
Qingdao Goertek
Executive
Jiang Long Microelectronics Research November 30, 2020 April 24, 2023 No
Director
Institute Co., Ltd.
Jiang Long Enkris Semiconductor Inc. Director November 18, 2021 August 7, 2023 No
Qingdao Virtual Reality
Jiang Long Chairman April 12, 2022 April 11, 2025 No
Institute Co., Ltd.
48
Full Text of Goertek Inc. Annual Report 2023
Receive remuneration
or allowance from
Name Entity Position Term start date Term end date
shareholders' entity
(Yes/No)
Goertek Optical
Jiang Long Technology (Shanghai) Director February 16, 2022 February 15, 2025 No
Co., Ltd
Qingdao Goertek Horizons
Jiang Long Director / CEO May 19, 2022 May 18, 2025 No
Technology Co., Ltd
Goertek Optical
Jiang Long Technology (Qingdao) Co., Director June 29, 2022 June 28, 2025 No
Ltd
Goertek Technology Vina
Duan Huilu Director January 31, 2019 September 25, 2023 No
Company Limited
Goertek Technology Co.,
Duan Huilu Supervisor August 14, 2021 August 13, 2024 No
Ltd.
Goertek Investment Co., Executive
Duan Huilu December 7, 2015 December 6, 2025 No
Ltd. Director / CEO
Weifang Goertek
Duan Huilu Director November 23, 2021 November 22, 2024 No
Electronics Co., Ltd.
Weifang Goertek Trading Executive
Duan Huilu August 26, 2020 August 25, 2026 No
Co., Ltd. Director / CEO
Qingdao Goertek
Executive
Duan Huilu Acoustics Technology Co., November 15, 2023 November 24, 2026 No
Director / CEO
Ltd.
Beijing Goertek
Duan Huilu Investment Management Supervisor January 22, 2019 January 21, 2025 No
Co., Ltd.
Goertek (HongKong) Co.,
Duan Huilu Director April 24, 2019 April 23, 2025 No
Limited
Goertek Technology (Hong
Duan Huilu Director November 3, 2023 November 2, 2026 No
Kong) Co., Limited
Qingdao Goertek
Executive
Duan Huilu Commercial Factoring Co., January 11, 2021 January 10, 2024 No
Director
Ltd.
Shanghai Goertek
Li Youbo CEO July 23, 2020 November 13, 2023 No
Technology Co., Ltd.
Weifang Goertek
Li Youbo Supervisor May 9, 2022 November 16, 2023 No
Electronics Co., Ltd.
Weifang Goertek Executive
Li Youbo November 16, 2023 November 15, 2026 No
Electronics Co., Ltd. Director / CEO
Goertek Optical
Liu Yaocheng Director June 27, 2022 June 26, 2025 No
Technology Co., Ltd
Shenzhen Elementplus
Liu Yaocheng Material Technology Co., Director September 5, 2023 September 4, 2026 No
Ltd.
GravityXR Electronics and
Liu Yaocheng Director April 17, 2023 April 16, 2026 No
Technology Co., Ltd.
Liu Yaocheng Shenzhen Camsense Director October 20, 2022 November 30, 2023 No
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Full Text of Goertek Inc. Annual Report 2023
Receive remuneration
or allowance from
Name Entity Position Term start date Term end date
shareholders' entity
(Yes/No)
Technology Co., Ltd.
Uphoton Technology
Liu Yaocheng Director June 13, 2022 June 12, 2025 No
(Shaoxing) Co., Ltd.
SeeYA Technology
Liu Yaocheng Director March 17, 2023 March 16, 2026 No
Corporation
China International Futures Independent
Wang Kun September 1, 2017 No
Co., Ltd. Director
Huadian Heavy Industries Independent
Wang Kun February 1, 2020 September 7, 2023 No
Co., Ltd. Director
Independent
Wang Kun GalaxyCore Inc. April 15, 2020 December 1, 2023 No
Director
LUSTER LightTech Co., Independent
Wang Kun September 28, 2020 No
Ltd. Director
Seetrum Companion
Huang (Shanghai) Enterprise
Managing Partner November 12, 2020 July 27, 2023 No
Yidong Management Center
(Limited Partnership)
Huang Advanced Fiber Resources Independent
March 31, 2021 March 30, 2024 No
Yidong (Zhuhai), Ltd. Director
Huang Beijing Seetrum
Supervisor May 20, 2021 July 14, 2023 No
Yidong Technology Co., Ltd.
Tianjin Hi-Chip
Huang
Technology Group Director April 29, 2022 July 7, 2023 No
Yidong
Corporation
Beijing Chunju Independent
Jiang Fuxiu April 12, 2022 June 6, 2023 No
Technology Co., Ltd. Director
Liu Chunfa Goertek Vina Co., Ltd Director January 1, 2019 December 31, 2024 No
Goertek Technology Vina
Liu Chunfa Director January 31, 2019 September 25, 2023 No
Company Limited
Shanghai Goertek
Liu Chunfa Supervisor April 25, 2020 April 24, 2026 No
Technology Co., Ltd.
Yili Precision Executive
Liu Chunfa November 9, 2023 November 8, 2026 No
Manufacturing Co., Ltd . Director
Jiang Yili Precision Executive
July 5, 2019 November 9, 2023 No
Hongzhai Manufacturing Co., Ltd . Director
Weifang Goertek
Jiang Executive
Communication June 26, 2021 June 25, 2024 No
Hongzhai Director
Technology Co., Ltd.
Dongguan JoyForce
Jiang Executive
Precision Manufacturing December 11, 2019 January 31, 2024 No
Hongzhai Director
Co., Ltd.
Jiang Kunshan Goertek Executive
November 9, 2020 November 20, 2023 No
Hongzhai Electronics Co., Ltd Director
Jiang Nanning Goertek
Chairman November 12, 2021 November 11, 2024 No
Hongzhai Electronics Co., Ltd
50
Full Text of Goertek Inc. Annual Report 2023
Receive remuneration
or allowance from
Name Entity Position Term start date Term end date
shareholders' entity
(Yes/No)
Jiang Nanning Goertek Trading
Chairman November 29, 2021 November 28, 2024 No
Hongzhai Co., Ltd.
Jiang Goertek Technology Vina
Director / CEO September 25, 2023 September 24, 2026 No
Hongzhai Company Limited
Jiang
Goertek Vina Co., Ltd Director / CEO September 22, 2023 September 21, 2026 No
Hongzhai
Jiang Goertek Precision Industry
Director / CEO October 2, 2023 October 1, 2026 No
Hongzhai Vietnam Company Limited
Jiang Goertek Smart Technology
Director / CEO March 15, 2023 March 14, 2026 No
Hongzhai Vina Co.,Ltd.
Beijing Goertek Executive
Yu Dachao November 30, 2019 November 13, 2023 No
Technology Co., Ltd. Director / CEO
Xi'an Goertek Electronic Executive
Yu Dachao May 7, 2019 November 6, 2023 No
Technology Co., Ltd. Director
Qingdao Goertek
Executive
Yu Dachao Acoustics Technology Co., December 10, 2021 November 15, 2023 No
Director / CEO
Ltd.
Yishui TECO Electronic
Yu Dachao Chairman / CEO December 10, 2019 November 24, 2023 No
Technology Co., Ltd.
Goertek Technology Vina
Yu Dachao Director January 31, 2021 September 25, 2023 No
Company Limited
Gao Shenzhen Goertek Executive
October 29, 2021 October 28, 2024 No
Xiaoguang Technology Co., Ltd. Director
Gao Shenzhen Goertek
CEO October 29, 2021 October 25, 2023 No
Xiaoguang Technology Co., Ltd.
Gao Shanghai Goertek Executive
April 25, 2020 April 24, 2026 No
Xiaoguang Technology Co., Ltd. Director
Gao
Goertek Electronics, Inc. Manager December 19, 2018 December 18, 2024 No
Xiaoguang
Gao Beijing Goertek Executive
November 13, 2023 November 12, 2026 No
Xiaoguang Technology Co., Ltd. Director
Gao Goertek Technology Korea
Director March 31, 2023 March 30, 2026 No
Xiaoguang Co., Ltd.
Goertek Optical
Rao Yi Director April 21, 2022 April 20, 2025 No
Technology Co., Ltd
Goertek Optical
Rao Yi Technology (Shanghai) CEO February 16, 2022 February 15, 2025 No
Co., Ltd
Goertek Optical
Rao Yi Technology (Qingdao) Co., CEO June 29, 2022 June 28, 2025 No
Ltd
Zhongrong Zhige
Executive
Rao Yi Technology (Tianjin) Co., April 1, 2022 March 31, 2025 No
Director
Ltd.
Rao Yi Uphoton Technology Director June 13, 2022 June 12, 2025 No
51
Full Text of Goertek Inc. Annual Report 2023
Receive remuneration
or allowance from
Name Entity Position Term start date Term end date
shareholders' entity
(Yes/No)
(Shaoxing) Co., Ltd.
Goertek Investment Co.,
Jia Jun'an Supervisor December 7, 2021 November 7, 2023 No
Ltd.
Weifang Goertek
Jia Jun'an Supervisor November 26, 2019 June 12, 2023 No
Electronics Co., Ltd.
Zhongchuang Zhige
Executive
Jia Jun'an Technology (Tianjin) Co., March 31, 2022 March 30, 2025 No
Director
Ltd.
Goertek Intelligence
Li Yongzhi Supervisor August 18, 2020 August 17, 2026 No
Technology Co., Ltd.
Kunshan Goertek
Li Yongzhi Supervisor November 9, 2020 November 20, 2023 No
Electronics Co., Ltd
Qingdao Goertek
Li Yongzhi Commercial Factoring Co., Supervisor January 11, 2021 January 10, 2027 No
Ltd.
Nanning Goertek
Li Yongzhi Supervisor November 12, 2021 November 11, 2024 No
Electronics Co., Ltd
Nanning Goertek Trading
Li Yongzhi Supervisor November 29, 2021 November 28, 2024 No
Co., Ltd.
Xi'an Goertek Electronic
Li Yongzhi Supervisor May 7, 2019 May 6, 2025 No
Technology Co., Ltd.
Yishui TECO Electronic December 10,
Li Yongzhi Supervisor December 9, 2025 No
Technology Co., Ltd. 2019
Rongcheng Goertek
Li Yongzhi Supervisor July 15, 2020 July 14, 2026 No
Technology Co., Ltd.
Goertek Microelectronics
Li Yongzhi Director December 23, 2020 December 22, 2026 No
Inc.
Weifang Goertek
Li Yongzhi Supervisor June 12, 2023 June 11, 2026 No
Electronics Co., Ltd.
Weifang Goertek
Li Yongzhi Supervisor November 16, 2023 November 15, 2026 No
Electronics Co., Ltd.
Goertek Investment Co.,
Li Yongzhi Supervisor November 7, 2023 November 6, 2026 No
Ltd.
Bei Ge (Weifang)
Feng Pengbo Intelligent technology Co., Chairman August 31, 2021 No
Ltd
Weifang Goertek
Wei Wenbin Communication CEO June 26, 2021 June 25, 2024 No
Technology Co., Ltd.
Description
of
incumbency None
in other
entities
Penalties imposed by securities regulatory authorities on current and outgoing directors, supervisors and senior management of the
company in the past three years
52
Full Text of Goertek Inc. Annual Report 2023
Applicable Not applicable
3. Remuneration of Directors, Supervisors and Senior Management
The decision-making procedure, basis and actual payment of the remuneration of directors, supervisors and senior management
The remuneration for the directors and senior management of the Company shall be proposed to the Board of Directors by the
Remuneration and Assessment Committee; The remuneration for the senior management shall be deliberated and determined by the
Board of Directors; The remuneration for directors shall be deliberated by the Board of Directors before being submitted to the general
meeting of shareholders for determination;
The remuneration for supervisors shall be deliberated by the Supervisory Board before being submitted to the general meeting of
shareholders for determination.
Proposal on the remuneration for directors, supervisors, and senior management approved by the above-mentioned approval authority
of the Company is as follows:
Proposal on the remuneration of directors:
Non-independent directors who hold concurrent senior management or other positions in the Company will be compensated according
to the remuneration proposal for senior management determined by the Board of Directors or the employment contract signed with the
Company. They will not be additionally compensated as directors. The remuneration standard of the Chairman of the Board is RMB
1.8 million per year before tax and paid on a monthly basis.
The allowance for independent directors of the Company is RMB 180,000 per person per year before tax and paid on a monthly basis.
Proposal on the remuneration of senior management of the Company:
The remuneration for the Company's senior management is based on the remuneration standard for their respective positions or the
provisions of their employment contracts.
The remuneration for senior management consists of basic remuneration and performance-based remuneration. Among them, the basic
remuneration shall be determined by the Company by reference to the market or industry remuneration standards in combination with
their positions, responsibilities, abilities, and other factors, and will be paid on a monthly basis; The performance-based remuneration
shall be determined based on factors such as the performance assessment period score and the position weight of each senior
management member, in accordance with the Company's relevant performance assessment management regulations. The remuneration
will then be submitted to the Company's Remuneration and Assessment Committee for approval.
Proposal on the remuneration of supervisors:
Supervisors who hold actual positions in the Company will receive remuneration based on their actual positions in the Company, in
accordance with the Company's relevant basic remuneration standards and performance-based assessment standards, without additional
supervisor's allowance; Supervisors who do not actually work in the Company will not be paid.
Additional explanation of the above proposal:
Normal working expenses incurred by the directors, supervisors, and senior management of the Company in the course of the
Company's business shall be borne by the Company. When directors, supervisors, and senior management of the Company leave their
positions due to a change in the term of office, re-election, resignation during their term, or for any other reason, their remuneration
will be calculated and paid based on their actual term of service.
Remuneration of directors, supervisors and senior management during reporting period
Unit: RMB 10,000
The total amount of
Whether to get paid
Appointment pre-tax remuneration
Name Gender Age Position by the related party
status received from the
of the Company
Company
Jiang Bin Male 58 Chairman Incumbent 180.00 No
Li Youbo Male 47 Director, President Incumbent 102.84 No
Duan Huilu Male 48 Director, Vice President Incumbent 89.32 No
Liu Yaocheng Male 51 Director Incumbent 77.07 No
Wang Kun Female 48 Independent Director Incumbent 18.00 No
Huang Yidong Female 59 Independent Director Incumbent 18.00 No
Jiang Fuxiu Male 55 Independent Director Incumbent 18.00 No
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The total amount of
Whether to get paid
Appointment pre-tax remuneration
Name Gender Age Position by the related party
status received from the
of the Company
Company
Chairman of
Feng Pengbo Male 56 Incumbent 45.24 No
Supervisory Board
Employee
Xu Xiaofeng Female 47 Representative Incumbent 69.23 No
Supervisor
Employee
Wei Wenbin Male 46 Representative Incumbent 73.32 No
Supervisor
Gao Xiaoguang Male 48 Vice President Incumbent 88.44 No
Liu Chunfa Male 48 Vice President Incumbent 88.54 No
Jiang Hongzhai Male 54 Vice President Incumbent 85.49 No
Yu Dachao Male 46 Vice President Incumbent 85.07 No
Rao Yi Male 41 Vice President Incumbent 95.81 No
Li Yongzhi Male 46 Chief Financial Officer Incumbent 66.10 No
Xu Dapeng Male 40 Board Secretary Incumbent 55.95 No
Jiang Long Male 50 Vice Chairman, CEO Resigned 25.64 No
Vice President, Board
Jia Jun'an Male 53 Resigned 25.58 No
Secretary
Kazuyoshi
Male 57 Vice President Resigned 23.15 No
Yoshinaga
Total - - - - 1,330.79 -
Other circumstances
Applicable Not applicable
VI. Performance of Directors' Duties during the Reporting Period
1. Board of Directors
Session Convening date Disclosure date Meeting resolution
For details, refer to the Announcement on the Resolution
of the 3rd Meeting of the 6th Board of Directors and other
The 3rd Meeting of the
April 7, 2023 April 8, 2023 announcements published in Securities Times, China
6th Board of Directors
Securities Journal, Shanghai Securities News, Securities
Daily, and CNINFO (http://www.cninfo.com.cn)
For details, refer to the Announcement on the Resolution
of the 4th Meeting of the 6th Board of Directors and other
The 4th Meeting of the
April 17, 2023 April 18, 2023 announcements published in Securities Times, China
6th Board of Directors
Securities Journal, Shanghai Securities News, Securities
Daily, and CNINFO (http://www.cninfo.com.cn)
For details, refer to the Announcement on the Resolution
of the 5th Meeting of the 6th Board of Directors and other
The 5th Meeting of the
April 23, 2023 April 24, 2023 announcements published in Securities Times, China
6th Board of Directors
Securities Journal, Shanghai Securities News, Securities
Daily, and CNINFO (http://www.cninfo.com.cn)
The 6th Meeting of the June 27, 2023 June 28, 2023 For details, refer to the Announcement on the Resolution
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Full Text of Goertek Inc. Annual Report 2023
Session Convening date Disclosure date Meeting resolution
6th Board of Directors of the 6th Meeting of the 6th Board of Directors and other
announcements published in Securities Times, China
Securities Journal, Shanghai Securities News, Securities
Daily, and CNINFO (http://www.cninfo.com.cn)
For details, refer to the Announcement on the Resolution
of the 7th Meeting of the 6th Board of Directors and other
The 7th Meeting of the
July 19, 2023 July 20, 2023 announcements published in Securities Times, China
6th Board of Directors
Securities Journal, Shanghai Securities News, Securities
Daily, and CNINFO (http://www.cninfo.com.cn)
For details, refer to the Announcement on the Resolution
of the 8th Meeting of the 6th Board of Directors and other
The 8th Meeting of the
August 28, 2023 August 29, 2023 announcements published in Securities Times, China
6th Board of Directors
Securities Journal, Shanghai Securities News, Securities
Daily, and CNINFO (http://www.cninfo.com.cn)
For details, refer to the Announcement on the Resolution
of the 9th Meeting of the 6th Board of Directors and other
The 9th Meeting of the
October 12, 2023 October 13, 2023 announcements published in Securities Times, China
6th Board of Directors
Securities Journal, Shanghai Securities News, Securities
Daily, and CNINFO (http://www.cninfo.com.cn)
For details, refer to the Announcement on the Resolution
of the 10th Meeting of the 6th Board of Directors and other
The 10th Meeting of the
October 26, 2023 October 27, 2023 announcements published in Securities Times, China
6th Board of Directors
Securities Journal, Shanghai Securities News, Securities
Daily, and CNINFO (http://www.cninfo.com.cn)
For details, refer to the Announcement on the Resolution
of the 11th Meeting of the 6th Board of Directors and other
The 11th Meeting of the
December 5, 2023 December 6, 2023 announcements published in Securities Times, China
6th Board of Directors
Securities Journal, Shanghai Securities News, Securities
Daily, and CNINFO (http://www.cninfo.com.cn)
For details, refer to the Announcement on the Resolution
of the 12th Meeting of the 6th Board of Directors and
The 12th Meeting of the
December 28, 2023 December 29, 2023 other announcements published in Securities Times, China
6th Board of Directors
Securities Journal, Shanghai Securities News, Securities
Daily, and CNINFO (http://www.cninfo.com.cn)
2. Directors' attendance at the meetings of Board of Directors and general meetings of shareholders
Directors' attendance at the meetings of Board of Directors and general meetings of shareholders
Number of
Attendance by Whether there is Attendance of the
Attendance Attendance Entrusted
Tele- Absence absence in person general meeting
Name required during the in person presence
communication (times) for two of shareholders
reporting period (times) (times)
(times) consecutive times (times)
(times)
Jiang Bin 10 8 2 0 0 No 3
Jiang Long 0 0 0 0 0 No 0
Li Youbo 10 5 5 0 0 No 3
Duan Huilu 10 9 1 0 0 No 3
Liu Yaocheng 8 5 2 0 1 No 2
Wang Kun 10 0 10 0 0 No 3
Huang 10 0 10 0 0 No 3
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Yidong
Jiang Fuxiu 10 0 10 0 0 No 3
Statement on absence from two consecutive meetings of the Board
None
3. Objections raised by directors to relevant matters of the Company
Whether directors raise any objection to relevant matters of the Company
Yes No
No objection was raised to relevant matters of the Company during the reporting period.
4. Other details on the performance of duties by directors
Whether proposals made by directors were adopted by the Company
Yes No
Statement on the adoption or non-adoption of proposals made by the directors
During the reporting period, the directors of the Company carried out work in strict accordance with the Company Law, the Securities
Law, Code of Corporate Governance for Listed Companies, Rules Governing the Listing of Shares on Shenzhen Stock Exchange, Self-
Regulatory Guidelines No. 1 for Companies Listed on Shenzhen Stock Exchange - Normative Operation of Listed Companies on the
Main Board, Articles of Association and Rules of Procedure of the Board of Directors. They fulfilled their duty of due diligence by
forming a consensus after full discussion on major governance and business matters of the Company, and resolutely supervising and
driving the implementation of the board resolution, so as to ensure the decision-making process being scientific, timely and efficient,
play a positive role in the sustained, healthy and stable development of the Company, and effectively safeguard the legitimate rights
and interests of the Company and all shareholders.
VII. Performance of Special Committees under the Board of Directors during the Reporting
Period
Number Important
Performance Specific
Committee of Convening opinions and
Members Meeting content of other objections
name meetings date suggestions
duties (if any)
held proposed
We reviewed and approved
proposals such as Special
Auditor's Report on the Deposit
Wang Kun,
Audit January 16, and Use of Funds Raised in Q4 Not Not
Jiang Bin, 6 Approved
committee 2023 2022 and Inspection Report on applicable applicable
Jiang Fuxiu
Matters including Related
Transactions and Guarantees
in the 2nd half of 2022, etc.
We reviewed and approved
proposals such as Proposal on
Wang Kun, Deliberation of Financial
Audit April 7, Not Not
Jiang Bin, 6 Accounts of 2022, and Approved
committee 2023 applicable applicable
Jiang Fuxiu Proposal on the Deliberation of
Self-assessment Report on
Internal Control of 2022, etc.
We reviewed and approved
Wang Kun, proposals such as Proposal on
Audit August 17, Not Not
Jiang Bin, 6 the Deliberation of Financial Approved
committee 2023 applicable applicable
Jiang Fuxiu Reports of the First Half of
2023, and Special Auditor's
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Number Important
Performance Specific
Committee of Convening opinions and
Members Meeting content of other objections
name meetings date suggestions
duties (if any)
held proposed
Report on the Deposit and Use
of Funds Raised in the First
Half of 2023, etc.
We reviewed and approved
Wang Kun,
Audit October 9, such as Proposal for Acquiring Not Not
Jiang Bin, 6 Approved
committee 2023 Shares of Subsidiaries Held by applicable applicable
Jiang Fuxiu
Related Parties, etc.
We reviewed and approved
proposals such as Proposal on
Wang Kun, the Deliberation of the
Audit October 23, Not Not
Jiang Bin, 6 Quarterly Report in Q3 2023, Approved
committee 2023 applicable applicable
Jiang Fuxiu and Special Auditor's Report on
the Deposit and Use of Funds
Raised in Q3 2023, etc.
We reviewed and approved
such as Proposal on the
Deliberation of the Work
Wang Kun,
Audit December Procedures of the Audit Not Not
Jiang Bin, 6 Approved
committee 25, 2023 Committee's Annual Report and applicable applicable
Jiang Fuxiu
Proposal on the Deliberation of
the Implementation Rules of the
Audit Committee, etc.
We reviewed and approved
proposals such as Proposal on
the Adjustment of the List of
Incentive Participants and the
Number of the Reserved
Remunerati Jiang Fuxiu, Granted Stock Option and the
on and Jiang Bin, April 6, Cancellation of Some Stock Not Not
6 Approved
assessment Huang 2023 Option in the 2021 Stock applicable applicable
committee Yidong Option Incentive Plan, and
Proposal on the Achievement of
the Exercise Conditions for the
First Exercise Period in the
2021 Stock Option Incentive
Plan, etc.
We reviewed and approved
Remunerati Jiang Fuxiu,
Proposal on Adjustment of
on and Jiang Bin, April 7, Not Not
6 Reserved Share in the "Home Approved
assessment Huang 2023 applicable applicable
No. 6" Employee Stock
committee Yidong
Ownership Plan , etc.
We reviewed and approved
proposals such as Proposal on
Remunerati Jiang Fuxiu,
Cancellation of Unexercised
on and Jiang Bin, June 21, Not Not
6 Stock Options at the Expiration Approved
assessment Huang 2023 applicable applicable
of the First Exercise Period of
committee Yidong
the Initial Granted Stock
Options in the 2021 Stock
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Full Text of Goertek Inc. Annual Report 2023
Number Important
Performance Specific
Committee of Convening opinions and
Members Meeting content of other objections
name meetings date suggestions
duties (if any)
held proposed
Option Incentive Plan and
Proposal on Adjusting the
Exercise Price of the
Company's 2021 and 2022
Stock Option Incentive Plan,
etc.
We reviewed and approved
proposals such as Proposal on
the Cancellation of the Grant
Remunerati Jiang Fuxiu,
of Reserved Equity Interests in
on and Jiang Bin, July 14, Not Not
6 the 2022 Stock Option Approved
assessment Huang 2023 applicable applicable
Incentive Plan and Proposal
committee Yidong
on the Deliberation of Goertek
Inc.'s "Home No. 7 ESOP
(Draft) and Its Abstract, etc.
We reviewed and approved
proposals such as Proposal on
the Adjustment of the List of
Remunerati Jiang Fuxiu, Incentive Participants and the
on and Jiang Bin, August 17, Number of Initial Granted Not Not
6 Approved
assessment Huang 2023 Stock Option in the 2023 Stock applicable applicable
committee Yidong Option Incentive Plan, and
Proposal on Granting Stock
Options to the Participants,
etc.
We reviewed and approved
Remunerati Jiang Fuxiu,
Proposal on Amending the
on and Jiang Bin, December Not Not
6 Implementation Rules of the Approved
assessment Huang 25, 2023 applicable applicable
Remuneration and Assessment
committee Yidong
Committee of Goertek Inc., etc.
VIII. Performance of the Supervisory Board
Whether the Supervisory Board found out any risk of the Company in its supervision activities during the reporting period.
Yes No
The Supervisory Board has no objection to the matters supervised during the reporting period.
IX. Personnel of the Company
1. Number of staff, specialty composition and educational level
Number of staff of the parent company at the end of the reporting
25,038
period
Number of Staff of major subsidiaries at the end of the reporting
56,332
period
Total number of staff at the end of the reporting period 81,370
Total number of staff who receive remuneration during the
81,370
reporting period
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Full Text of Goertek Inc. Annual Report 2023
Number of retired staff the Company and its major subsidiaries are
0
required to compensate
Specialty composition
Category Number
Production staff 56,240
Sales staff 725
Technical staff 19,989
Financial staff 274
Administrative staff 4,142
Total 81,370
Educational level
Category Number
PhD 88
Master 3,310
Bachelor 14,615
College degree 14,748
Below college degree 48,609
Total 81,370
2. Remuneration policy
The Company has always prioritized a people-oriented approach, recognizing that talent is a core asset for corporate development. We
continue to provide our employees with a variety of compensation and welfare benefits, paying attention to their work and life needs,
and continuously striving to improve their sense of belonging and well-being.
Regarding remuneration, the Company continuously conducts remuneration adjustments and optimizations to ensure that our
remuneration remains competitive with industry benchmarks. In 2023, for core positions and talents supporting the strategic new
business development of the Company, a special remuneration adjustment strategy was implemented to effectively achieve precision
talent attraction and retention. To guarantee the talent reserve, the Company continuously raises the remuneration level of fresh
graduates, adopts the incentive project of "reward" to retain high-potential talents, and offers the incentive project of "moat" to core
engineers.
In terms of incentives, the Company continues optimizing the remuneration distribution mechanism for all employees to ensure that
the remuneration distribution is closely linked to individual and organizational performance. This will stimulate a culture of high
performance. The Company also implements stock option incentive plans for backbone employees. Long-term incentives have become
an important way for the Company to attract, retain, and motivate employees to achieve the mutual development of the enterprise and
its employees. In 2023, the Company released a new "Home No. 7" Employee Stock Ownership Plan and the 2023 Stock Option
Incentive Plan, which covered almost 6,000 employees.
Regarding welfare, the Company establishes a diverse welfare system with the characteristics of a home culture, aiming to enhance
employees' sense of belonging and well-being. The Company offers a variety of welfare programs for its employees, including eight
categories: comfortable accommodation, education support, delightful entertainment, exclusive benefits, convenient living conditions,
holiday benefits, health care, and emotional support. Additionally, the Company offers over 50 welfare sub-projects and continues to
hold creative and warm activities to protect employees' well-being in a comprehensive, multi-level, and three-dimensional manner.
3. Training programs
In 2023, the Human Resources Management Department worked in line with the Company's development strategy and business
demands. The Company also paid attention to the enhancement of personnel's professional knowledge and comprehensive ability, so
as to further strengthen the diversified cultivation system of talents. Various personnel training programs were comprehensively
promoted. Cadre training was refined and perfected and a breakthrough was made in the training of digital personnel. Professional
personnel were trained in all aspects and new staff were trained to further expand the integration of production and education. The
Company gradually systematized and standardized its training resources. By constructing an administrative system and mechanism
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Full Text of Goertek Inc. Annual Report 2023
and promoting functional play, the Company fostered an organizational learning atmosphere, with a commitment to building a learning
organization that comprehensively helps employees improve their abilities and grow.
In 2024, the Company, under the unified planning of the learning and development center, will deepen the integration of strategic
business development and talents training by closely surrounding the talent strategy. Horizontally, the Company will expand the groups
of trainees. Vertically, the Company will improve various types of training programs, strengthen the overall talent training system, and
step up the training for strategic personnel such as cadres and digital talents to meet the Company's strategic needs for strategic talents.
Simultaneously, the company will accelerate the digitization and informatization of training to enhance employees' learning
experiences comprehensively. This initiative aims to bolster employees' capabilities and facilitate the development of a skilled
workforce, thereby ensuring the Company's sustained growth.
4. Labor outsourcing
Applicable Not applicable
X. Profit Distribution and Conversion of Capital Surplus into Share Capital
Formulation, execution or adjustment of profit distribution policy, especially the cash dividend during the reporting period
Applicable Not applicable
The Company has strictly implemented the Shareholder Return Plan for the Next Three Years (2022-2024), and clarified the standard,
ratio, and decision-making procedures of the distribution policy, which ensures the continuity and stability of the profit distribution
policy, in order to fully protect the legitimate rights and interests of minority investors. The Company did not make changes to the
profit distribution policy during the reporting period.
Special description of the cash dividend policy
Whether in compliance with provisions in the Articles of
Association or requirements of the resolution of the extraordinary Yes
general meeting of shareholders:
Whether the dividend standard and the proportion are definite and
Yes
clear:
Whether the related decision-making procedures and mechanisms
Yes
are complete:
Whether independent directors perform their duties responsibly
Yes
and play their due roles:
If the Company chooses not to distribute cash dividends, it shall
disclose the specific reasons and outline the measures to be taken Not applicable
to enhance investor returns:
Whether minority shareholders have the opportunity to fully
express their opinions and demands and their legitimate rights and Yes
interests are fully protected:
Whether the conditions and procedures are transparent and
comply with regulations while the cash dividend policy is adjusted The cash dividend policy has not been adjusted.
or changed:
The profits of Goertek in the reporting period and the parent company's profits distributable to shareholders are positive, but the
Company did not put forward a proposed plan for cash dividend distribution.
Applicable Not applicable
Profit distribution and conversion of capital surplus into share capital during the reporting period.
Applicable Not applicable
Number of bonus shares per 10 shares 0
Dividend per 10 shares (RMB) (tax inclusive) 1.00
Conversion of capital surplus into share capital per 10 shares
0
(shares)
Share capital base of the distribution proposal (shares) 3,382,928,889
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Cash dividend amount (RMB) (tax inclusive) 338,292,888.90
Cash dividend amount distributed by other means (such as shares
177,637,427.00
repurchase) (RMB)
Total cash dividends (including other means) (RMB) 515,930,315.90
Distributable profit (RMB) 11,036,440,853.38
Proportion of total cash dividends (including other means) in total
100%
profit distribution
Cash dividends
If the Company is in developing stage, and there are major capital expenditure arrangements, the minimum proportion of cash
dividends in profit distribution should reach 20%.
Detailed description of the proposal for profit distribution or capitalization from capital surplus funds
According to the standard unqualified auditor report issued by Zhongxi CPAs (Special General Partnership) for the Company, the net
profit attributable to the shareholders of the Company in the Company's consolidated financial statement in 2023 is RMB
1,088,076,730.88. The parent company reports a net profit of RMB 2,185,304,824.52. The statutory surplus reserve fund is RMB
218,530,482.45 in the Company's consolidated financial statement in 2023, plus the undistributed profit at the beginning of the period
and minus the actually distributed cash dividend of RMB 340,516,294.90 for the year of 2022, the undistributed profit in the
consolidated statement amounts to RMB 17,038,581,549.12 and the undistributed profit of the parent company amounts to RMB
11,036,440,853.38 as of December 31, 2023. The Company's profit available for distribution to shareholders in 2023 is RMB
11,036,440,853.38, according to the principle that profit distribution should be based on the lower of the profit available for
distribution of the parent company and the profit available for distribution of the consolidated financial statements.
In accordance with the relevant provisions of the Company Law and Articles of Association, the proposed profit distribution of the
Company in 2023 is as follows: based on the total share capital registered on the record date of equity distribution minus the
repurchased shares in the Company's specific securities repurchase account and the principle of unchanged distribution ratio, the
Company will distribute cash dividend of RMB 1.00 (tax inclusive) for per 10 shares to all the shareholders, as well as 0 bonus shares
(tax inclusive), and there is no conversion of capital surplus into share capital.
Up to now, there are 34,205,700 shares in the Company’s specific securities repurchase account, the amount of cash dividend is
calculated based on the current total share capital of 3,417,134,589 shares after deducting the above repurchased shares. The total
amount of cash dividends is RMB 338,292,888.90 (tax inclusive), which accounts for 31.09% of the net profit attributable to
shareholders of the listed company in 2023.
If the Company's total share capital changes due to share buybacks, the exercise of stock option incentive objects, material asset
restructuring, cancellation of share buybacks, share increase for refinancing, or other reasons between the disclosure of the Company's
profit distribution plan for 2023 and the date of registration of equity distribution, the Company will adjust the total distribution
amount based on the principle of unchanged distribution ratio.
XI. Implementation of Stock Option Incentive Plan, Employee Stock Ownership Plan or
Other Employee Incentives
Applicable Not applicable
1. Stock option incentive
(1) Stock Option Incentive Plan in 2021 (hereinafter referred to as "the Incentive Plan 2021 ")
On April 16, 2021, the Company convened the 19th meeting of the 5th Board of Directors and the 14th meeting of the 5th Supervisory
Board, which approved proposals such as Proposal on the Deliberation of the 2021 Stock Option Incentive Plan (Draft) and Its Abstract
of Goertek Inc., etc. On May 7, 2021, the proposals mentioned above were approved on the annual general meeting of 2020. The
Incentive Plan 2021 was approved. The Board of Directors was authorized to handle relevant matters regarding the Incentive Plan 2021.
On April 7, 2023, the Company convened the 3rd meeting of the 6th Board of Directors and the 3rd meeting of the 6th Supervisory
Board, and approved Proposal on the Adjustment of the List of Incentive Participants and the Number of Reserved Granted Stock
Option and the Cancellation of Some Stock Option in the 2021 Incentive Plan and Proposal on the Achievement of the Exercise
Conditions of Reserved Granted Stock Options for the First Exercise Period in the 2021 Stock Option Incentive Plan. The Board of
Directors determined that the exercise conditions for the first exercise period of the reserved grant portion of the Incentive Plan 2021
had been fulfilled, and the incentive participants may exercise their options from the processing completion time to April 19, 2024.
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On June 27, 2023, the Company convened the 6th meeting of the 6th Board of Directors and the 5th meeting of the 6th Supervisory
Board, which approved Proposal on Cancellation of Unexercised Stock Options at the Expiration of the First Exercise Period of the
Initial Granted Stock Options in the 2021 Stock Option Incentive Plan, Proposal on Adjusting the Exercise Price of the Company's
2021 and 2022 Stock Option Incentive Plan, Proposal on the Adjustment of the List of Incentive Participants and the Number of Initial
Granted Stock Option and the Cancellation of Some Stock Option in the 2021 Stock Option Incentive Plan, and Proposal on the
Achievement of the Exercise Conditions of Initial Granted Stock Options for the Second Exercise Period in the 2021 Stock Option
Incentive Plan. Pursuant to the above resolutions, the Company canceled the unexercised stock options at the expiration of the first
exercise period of the initial granted stock options in the Incentive Plan 2021, adjusted the exercise price of the initial and reserved
granted stock options in the Incentive Plan 2021 in accordance with the authorization of the annual general meeting; At the same time,
the Board of Directors determined that the exercise conditions of initial granted stock options for the second exercise period in the
Incentive Plan 2021 had been fulfilled, and the incentive participants may exercise their rights upon completion of the exercise
procedures to June 23, 2024.
On August 7, 2023, the Company completed the procedures related to the independent exercise of the initial granted stock options for
the second exercise period and the granted reserved shares for the first exercise period in the Incentive Plan 2021 aforementioned in
the China Securities Depository and Clearing Corporation Limited Shenzhen Branch. As of the end of the reporting period, the
Company's initial granted stock options in 2021 were in the second exercise period, while the granted reserved stock option were in
the first exercise period.
(2) Stock Option Incentive Plan in 2022 (hereinafter referred to as "the Incentive Plan 2022")
On July 8, 2022, the Company convened the 31st meeting of the 5th Board of Directors and the 25th meeting of the 5th Supervisory
Board, which approved proposals such as Proposal on the Deliberation of the 2022 Stock Option Incentive Plan (Draft) and Its Abstract
of Goertek Inc.etc. On July 26, 2022, the aforementioned proposals were ratified at the first extraordinary general meeting of 2022.
The Incentive Plan 2022 was approved. The Board of Directors were authorized to handle relevant matters regarding the Incentive Plan
2022.
On June 27, 2023, the Company convened the 6th meeting of the 6th Board of Directors and the 5th meeting of the 6th Supervisory
Board, which approved Proposal on Adjusting the Exercise Price of the Company's 2021 and 2022 Stock Option Incentive Plan. The
exercise price of the initial and reserved granted stock options in the Incentive Plan 2022 was adjusted pursuant to the authorization
given by the stockholders' meeting, as the Company implemented the 2022 Equity Allocation Plan.
On July 19, 2023, the Company held the 7th meeting of the 6th Board of Directors and the 6th meeting of the 6th Supervisory Board,
which approved Proposal on the Cancellation of the Grant of Reserved Equity Interests in the 2022 Stock Option Incentive Plan. In
accordance with the authorization from the stockholders' meeting, the Board of Directors decided to cancel the grant of reserved stock
options in the Incentive Plan 2022. As of the end of the reporting period, the initial granted stock options in 2022 were in the exercise
waiting period.
(3) Stock Option Incentive Plan in 2023 (hereinafter referred to as "the Incentive Plan 2023")
On July 19, 2023, the Company convened the 7th meeting of the 6th Board of Directors, which approved proposals such as Proposal
on the Deliberation of the 2023 Stock Option Incentive Plan (Draft) and Its Abstract of Goertek Inc.,etc. The participants eligible for
incentives under the Incentive Plan 2023 include key management personnel and business leaders of the Company and its subsidiaries.
On August 8, 2023, the proposals mentioned above were approved on the 1st extraordinary general meeting of 2023. The Incentive
Plan 2023 was approved. The Board of Directors were authorized to handle relevant matters regarding the Incentive Plan 2023.
On August 28, 2023, the Company convened the 8th meeting of the 6th Board of Directors and the 7th meeting of the 6th Supervisory
Board, which approved Proposal on the Adjustment of Incentive Participants and the Number of Initial Granted Stock Options in the
2023 Stock Option Incentive Plan, and Proposal on Granting Stock Options to the Participants. Due to work changes or resignations,
153 incentive participants no longer meet the requirements to participate in the Incentive Plan 2023. As a result, the Board of Directors
of the Company adjusted the total number of initial incentive participants in the Incentive Plan 2023 from 5,704 to 5,551, and the
number of initially granted stock options from 210,000,000 to 208,990,900. The number of stock options reserved for grant remained
unchanged, while the total number of stock options to be granted to incentive participants was adjusted from 225,200,000 to
224,190,900. Additionally, the Board of Directors determined that the conditions for the initial grant in the Incentive Plan 2023 have
been met and set August 28, 2023 as the date for the initial grant.
On September 26, 2023, the Company completed the registration of the initial granted stock options in the Incentive Plan 2023 and
granted 208,990,900 stock options to 5,551 eligible participants. As of the end of the reporting period, the initial granted stock options
in 2023 were in the exercise waiting period.
Stock options granted to directors and senior management
Applicable Not applicable
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Unit: share
Exercise Number Number
Number
Number price of Number Market of of
Number of
Number of of stock Number of stocks of stock price at restricted Number restricted Grant
of stocks restricted
stock options exercisable exercised options the end of stocks of stocks stocks price of
exercised stocks
options held newly stocks during held at the held at unlocked newly restricted
Name Position during held at
at the granted during the the the end of reporting the in the granted stocks
the the end of
beginning of during the reporting reporting the period beginning current during (Yuan per
reporting the
the year reporting period period reporting (Yuan per of the period the share)
period reporting
period (Yuan per period share) reporting reporting
period
share) period period
Xu Board
86,000 73,100 - 29.03 30,100 21.01
Dapeng Secretary
Total - 86,000 73,100 - - 30,100 - -
Remarks (if any)
The assessment and incentive mechanism for senior management
The remuneration standard for senior management shall be formulated by the remuneration and assessment committee, and
implemented after approval by the Board of Directors.
2. Implementation of employee stock ownership plan
Applicable Not applicable
All valid employee stock ownership plans during the reporting period
Total shares Shareholding
Participants Number Changes Source of funds
held percentage
Home No. 4 ESOP: Directors (excluding independent
directors), supervisors, senior management, key 4,000 0 None 0.00% Not applicable
management personnel and key business personnel
Home No. 5 ESOP: Directors (excluding independent
directors), supervisors, senior management, key 25 0 None 0.00% Self-raised
management personnel and key business personnel
Home No. 6 ESOP: Directors (excluding independent
directors), supervisors, senior management personnel, 1,000 67,338,040 None 1.97% Self-raised
and key business personnel
Home No. 7 ESOP: Middle and senior management and
key business personnel of the Company and its holding
40 3,658,800 None 0.11% Self-raised
subsidiaries and other eligible employees, as determined
by the Board of Directors
Total shares held of directors, supervisors and senior management in ESOPs during the reporting period
Number of shares held Number of shares held Shareholding
Name Position at the beginning of the at the end of the
reporting period reporting period percentage
Duan Huilu, Liu Yaocheng, Xu Xiaofeng,
Wei Wenbin, Gao Xiaoguang, Liu
Chunfa, Jiang Hongzhai, Jia Jun'an Directors,
(resigned as the Board Secretary in April supervisors, senior 3,039,000 11,780,000 0.34%
2023), Feng Pengbo, Yu Dachao, management
Yoshinaga Kazuyoshi (resigned in March
2023), Li Yongzhi, Li Youbo, Xu Dapeng
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Changes of asset management agency during the reporting period
Applicable Not applicable
Changes in shareholders' equity caused by shares disposal of the participants and other reasons during the reporting period
Applicable Not applicable
By the end of the reporting period, the Company's "Home No. 4" ESOP and "Home No. 5" ESOP have been sold out and the liquidation
has been completed. The Company's "Home No. 6" ESOP held 67,338,040 shares, accounting for 1.97% of total shares, while the
"Home No. 7" ESOP held 3,658,800 shares, accounting for 0.11% of total share capital.
Exercise of shareholders' rights during the reporting period
During the reporting period, the ESOPs exercised the shareholders' rights to participate in cash dividend of 2022, but did not participate
in voting of the general meeting of shareholders or exercise other shareholders' rights.
Other relevant situations and descriptions related to ESOPs during the reporting period
Applicable Not applicable
The Company shall continue to manage the ESOP in accordance with the ESOP Management Measures. During the reporting period,
the third lock-up period of the Company's "Home No. 4" ESOP expired, allowing holders to sell 2,190,100 shares in the secondary
market. 4,791,250 shares under the "Home No. 5" ESOP were reverted to the Company at the initial purchase price due to the holder's
resignation or failure to meet all unlocking conditions in personal assessment, and the remaining 700,875 shares held can be sold in
the secondary market after being unlocked; As of the end of the reporting period, the Company's shares held under the "Home No. 4"
ESOP and "Home No. 5" ESOP had been sold through centralized bidding; 2,651,720 shares were recovered under the "Home No. 6"
ESOP due to the departure of the holder. The recoveries and disposals mentioned above comply with the relevant agreements outlined
in the ESOP.
Changes in members of the Management Committee of the ESOPs
Applicable Not applicable
Financial impacts of the ESOPs during the reporting period and relevant accounting treatment
Applicable Not applicable
In accordance with the Accounting Standard for Business Enterprises No.11 - Share-based Payments: The equity-settled share-based
payment in exchange for services received from employees could not exercise until the completion of services for a vesting period, or
until the achievement of a specified performance condition. The Company at each balance sheet date during the vesting period
recognizes the services received for the current period as related costs or expenses, and capital surplus, at amount equal to the fair value
of the equity instruments at the grant date, based on the best estimate of the number of equity instruments expected to exercise. In 2023,
the amortized expenses of the Company's "Home No. 4" ESOP, "Home No. 5" ESOP, "Home No. 6" ESOP and "Home No. 7" ESOP
were RMB 7.2233 million, RMB -82.7473 million, RMB 244.5334 million and RMB 6.1696 million respectively, which were
recognized as related expenses and capital surplus.
Termination of ESOP during the reporting period
Applicable Not applicable
On July 29, 2023, the Company published Announcement of Goertek Inc. on the Completion and Termination of the Sale of "Home No.
4" ESOP and "Home No. 5" ESOP. The "Home No. 4" ESOP and "Home No. 5" ESOP were completed and terminated on July 29,
2023.
3. Other employee incentive measures
Applicable Not applicable
XII. Construction and implementation of the Company's Internal Control System During the
Reporting Period
1. Construction and implementation of internal control
The Company has implemented a rigorous and effective internal control system that is tailored to its specific needs in strict accordance
with Basic Standards for Enterprise Internal Control, as well as relevant laws, regulations, and normative documents. The internal
audit department is responsible for overseeing and assessing the implementation of this system. The Board of Directors conducts an
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annual self-evaluation of the Company's internal controls and discloses Internal Control Self-Evaluation Report. Simultaneously, the
Company engages an accounting firm to conduct an internal control audit of the Company.
The Company consistently enhances its internal control in compliance with relevant laws, regulations, normative documents, and
Articles of Association. During the reporting period, the Company optimized over 10 rules and regulations, including Independent
Directors' Work System, and all work was performed in compliance with various systems. The Company manages its major internal
controls and matters, including governance and organizational structure, internal supervision, human resources policies, corporate
culture building, social responsibility, fund management, sales and procurement, R&D, engineering projects, asset management, related
party transactions, external guarantees, investment management, use of raised funds, financial reports, information disclosure, and
subsidiary control, in a strict, adequate and effective manner.
During the reporting period, the Company did not encounter any material deficiencies or significant deficiencies in its internal control
over financial and non-financial reporting. The Company has maintained effective internal control in all significant areas, as required
by the corporate internal control standard system and relevant regulations.
2. Details of material defects of internal control detected during the reporting period
Yes No
XIII. Management and controls of subsidiaries during the Reporting Period
Problems
Reorganization Measures Progress in Follow-up
Name of company Reorganization plan encountered in
progress taken solution solution
the reorganization
Integrate with the Company's
optical products-related
businesses, adjust the
organization and personnel
according to the needs of
Uphoton Technology Under normal Not Not Not
business development, unify None
(Shaoxing) Co., Ltd. progress applicable applicable applicable
financial management, and
complement each other's
advantages, so as to realize
the synergy effect of the
business combination.
XIV. Assessment Report on Internal Control or Auditor's Report on Internal Control
1. Assessment of internal control
Disclosure date of the Internal Control Self-
March 28, 2024
assessment Report
Disclosure index of the Internal Control The Goertek Inc. Self-Assessment Report on Internal Control of 2023 disclosed on
Self-assessment Report www.cninfo.com.cn on March 28, 2024
Proportion of the total assets of entities
included in the assessment scope to the total
100.00%
assets of the Company's consolidated
financial statements
Proportion of the total income of entities
included in the assessment scope to the total
100.00%
income of the Company's consolidated
financial statements
Defect Identification Standard
Category Financial report Non-financial report
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The qualitative standard of the
The qualitative standard of the assessment of
assessment of internal control
internal control defects in financial reporting
defects in non-financial
determined by the Company are as follows:
reporting determined by the
Signs of material deficiencies in financial reporting
Company are as follows:
include:
The identification of defects in
(1) Fraud of directors, supervisors and senior
non-financial reports is mainly
management on the financial report;
determined by the impact of
(2) Corrections of previously disclosed financial defects on the effectiveness of
reports; business processes and the
(3) Material misstatement of current period possibility of occurrence.
financial statements identified by certified public Defects are defined as general
accountant but not identified by the Company's defects if they are less likely to
internal control; happen, and will lower the
(4) Ineffective supervision on the financial work efficiency or effect,
statements by the audit committee and the internal increase the uncertainty of the
audit department. effect or make it deviate from
Qualitative criteria Signs of significant deficiencies in financial the expected goal;
reporting include: Defects are defined as
(1) Failure to select and apply accounting policies significant deficiencies if they
in accordance with Generally Accepted Accounting are likely to happen and will
Principles; significantly lower the work
(2) No anti-fraud procedures and control measures efficiency or effect,
have been established; significantly increase the
uncertainty of the effect, or
(3) No corresponding control mechanism has been
make it deviate from the
established or implemented for the accounting
expected goal;
treatment of unconventional or special transactions,
and there is no corresponding compensatory Defects are defined as material
control; deficiencies if they are likely to
happen and will seriously lower
(4) One or more defects is or are existing in the
the work efficiency or effect,
control of the financial reporting process, that the
seriously increase the
prepared financial statements cannot be reasonably
uncertainty of the effect, or
guaranteed to be true and complete.
make it seriously deviate from
General defects: other internal control defects.
the expected goal.
The quantitative standard of the assessment of
internal control defects in financial reporting are as
follows:
(1) If one of the following conditions is met, it may
be recognized as a material deficiency:
Item Impact of defects The quantitative standard of the
Potential assessment of internal control
≥ 5%, with an amount ≥ RMB 10 defects in non-financial
Quantitative criteria misstatement
million reporting is in accordance with
of total profit
the quantitative standard of
Potential
defects in financial reporting.
misstatement ≥ 1%
of total assets
Potential
misstatement ≥ 1%
of revenue
(2) If one of the following conditions is met, it may
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be recognized as a significant deficiency:
Item Impact of defects
Potential 3%≤misstatement <5%
misstatement
of total profit
Potential 0.5≤misstatement <1%
misstatement
of total assets
Potential 0.5≤misstatement <1%
misstatement
of revenue
(3) If one of the following conditions is met, it may
be recognized as a general defect:
Item Impact of defects
Potential <3%
misstatement
of total profit
Potential <0.5%
misstatement
of total assets
Potential <0.5%
misstatement
of revenue
Number of material deficiencies in financial
0
reporting
Number of material deficiencies in non-
0
financial reporting
Number of significant deficiencies in
0
financial reporting
Number of significant deficiencies in non-
0
financial reporting
2. Auditor's Report on Internal Control
Applicable Not applicable
The opinion paragraph in the Auditor's Report on Internal Control
We believe that Goertek Inc. maintained effective internal control over accounting reports in all material aspects in accordance with
Basic Standards for Internal Enterprise Control and relevant provisions on December 31, 2023.
Disclosure of the Auditor's Report on Internal Control Disclosed
Disclosure date of the Auditor's Report on Internal Control March 28, 2024
The Audit Report on Internal Control of Goertek Inc. (Zhong
Disclosure index of the Auditor's Report on Internal Control Xi Special Audit No. 2024T00220) was published on
www.cninfo.com.cn on March 28, 2024
Type of internal control auditor's report opinions Standard Unqualified Opinion
Material deficiencies found in non-financial reporting No
Whether the accounting firm issued a modified auditor's report on internal controls
Yes No
Whether the Auditor's Report on Internal Control is consistent with the Self-assessment Report of the Board of Directors
Yes No
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XV. Rectification of Problems Identified by Self-examination in the Special Actions on
Governance of Listed Companies
Not applicable
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Section V Environmental and Social Responsibilities
I. Major Environmental Issues
Whether the listed company or its subsidiaries are entities with pollutant discharges announced by local environmental protection
authorities
Yes No
Policies and industry standards related to environmental protection
According to the Decision of the National Development and Reform Commission on Amending the Catalogue of Industrial Structure
Adjustment (2019 version), all projects of Goertek Inc. are classified as encouraged projects, aligning with national industrial
development policies. These projects also comply with the requirements outlined in the Opinions of the People's Government of
Shandong Province on the Implementation of the "Three Lines and One List" Ecological Zoning Management Approach. The pollutants
emitted by the projects strictly adhere to the standards stipulated in environmental assessments and emission permits.
All projects of Yili Precision Manufacturing Co., Ltd. are carried out in line with national industrial development policies according to
the Decision of the National Development and Reform Commission on Amending the Catalogue of Industrial Structure Adjustment
(2019 version); and the projects meet the requirements of the Opinions of the People's Government of Shandong Province on the
Implementation of the "Three Lines and One List" Ecological Zoning Management Approach. The project's pollutants are in
compliance with the requirements of environmental assessment and emission permit standards.
Administrative licenses for environmental protection
Goertek Inc. obtained the registration receipt of the pollution discharge permit in accordance with the Measures for the Management
of Pollution Discharge Permits (Trial) (Revised in 2019). The registration number is 91370700729253432M004Y, and the certificate
is valid from November 30, 2023 to November 29, 2028.
Yili Precision Manufacturing Co., Ltd. has applied for a pollution discharge permit as required. The certificate number is
913707840744048096001V, and the certificate is valid from July 7, 2022 to July 6, 2027.
Industry emission standards and the details of pollutant emissions involved in production and operation activities
Types of Name of
major major Concentrati Enforced Total Discharge
Name of the Number of Locations of Total
pollutants pollutants Type of on/intensity standards of approved exceeding
Company or discharging discharging discharge
and and discharge of pollutant pollutant discharge the
subsidiaries ports ports volume
particular particular discharged discharge volume standard
pollutants pollutants
COD: COD: COD13.142 COD65.133
Yili Precision COD; 50mg/L; 500mg/L; 2t/a; t/a;
Intermittent
Manufacturing Wastewater ammonia 1 In the plant ammonia ammonia ammonia ammonia None
discharge
Co., Ltd. nitrogen nitrogen: nitrogen: nitrogen: nitrogen:
5mg/L 45mg/L 2.28592t/a 5.862t/a
Yili Precision
Hazardous Indirect Not Not Not Not Not Not
Manufacturing Solid waste None
waste discharge applicable applicable applicable applicable applicable applicable
Co., Ltd.
Treatment of pollutants
In accordance with The Environmental Impact Assessment and Approval, the Company constructs supporting treatment facilities for
gas waste, establishes supporting measures for solid waste storage, disposal, and comprehensive utilization, along with leakage
prevention and seepage prevention measures, and ensures the normal enforcement of all the above measures.
In accordance with The Environmental Impact Assessment and Approval, Yili Precision Manufacturing Co., Ltd. constructs supporting
treatment facilities for water and gas waste, takes measures of noise reduction, storage, disposal and comprehensive utilization of solid
waste, and leakage and seepage prevention, and ensures the normal operation of all above measures.
Environmental self-monitoring programme
The Company entrusts third-party monitoring organizations to monitor the environmental factors of the plant area and issue an
inspection report every year in strict accordance with the requirements of the discharge permit.
Yili Precision Manufacturing Co., Ltd. has installed online equipment for monitoring COD, ammonia nitrogen, flow rate and PH value
at the main wastewater discharge outlet, which is networked with the local department of environmental protection authorities. A third-
party monitoring organization shall be entrusted to conduct monitoring of wastewater, waste gas, groundwater, and soil pollutants in
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strict accordance with the requirements of the discharge permit and to issue an inspection report, and related information shall be
disclosed as required.
Emergency response plan for unexpected environmental events
Goertek Inc., combined with the National Environmental Emergency Response Plan and the Guidelines to Develop Emergency
Response Plan for Environmental Pollution Accidents, has formulated the Environmental Emergency Response Plan of Goertek Inc.
based on various risk factors, and has reported the plan to the High-tech Branch of Weifang Municipal Ecology and Environment
Bureau for recording (No. 370708-2022-036-L). Goertek also organizes relevant training and drills on a regular basis, in order to
improve the emergency response ability of employees and achieve continuous improvement.
In view of various risk factors, Yili Precision Manufacturing Co., Ltd. refers to The National Environmental Emergency Plan and The
Guidelines to Develop Emergency Response Plan for Environmental Pollution Accidents, formulates the Yili Environmental
Emergency Plan, and puts it on record in the Anqiu Branch of Weifang Municipal Ecology and Environment Bureau (record No.
370784-2023-003-H). Relevant training and drills are organized on a regular basis to further improve employees' ability to deal with
emergency events and achieve continuous improvement.
Investment in environmental governance and protection and the payment of environmental protection tax
The Company and its subsidiaries pay environmental protection tax as required, with a total of RMB 95,164.14 in 2023. All payments
have been made as of the date of this Report.
Measures taken to reduce carbon emissions during the reporting period and their effects
Applicable Not applicable
To actively respond to the national strategy of "peak carbon dioxide emissions and carbon neutrality", the Company adhered to the
carbon reduction concept of "client orientation, differentiated control, and targeted satisfaction". The Company implemented refined
carbon emission management that is tailored to client requirements, kept promoting its low-carbon transformation, and contributed to
the construction of a green and low-carbon future society.
During the reporting period, the Company's manufacturing plants located in Weifang and Rongcheng in Shandong Province, Dongguan
in Guangdong Province, and Bac Ninh Province in Vietnam emitted 49,184.5 tons of CO 2 equivalent in Scope 1 and 359,524.7 tons of
CO2 equivalent in Scope 2. The third-party certification authority verified in accordance with ISO 14064-1:2018 Greenhouse Gases -
Part 1: Specification with Guidance at the Organization Level for Quantification and Reporting of Greenhouse Gas Emission and
Removals and issued the greenhouse gas verification statement.
To reduce energy consumption during operations, the Company actively promoted energy conservation and carbon reduction efforts
in accordance with the Energy Conservation Project Management System. During the reporting period, the Company achieved a
cumulative reduction of 33,798.6 tons of CO2 equivalent of greenhouse gas emissions through 160 energy-saving improvements such
as air conditioning, air pressure, and lighting systems.
To optimize the energy structure, the Company implemented the construction of distributed photovoltaic power stations, market-
oriented green electricity transactions, renewable energy certificate trading, and other methods to enhance the utilization of clean energy.
During the reporting period, the Company's photovoltaic power plants had an installed capacity of 49.37 MW. The Company purchased
86,108 MWh of green power, 14,139 MWh of power with Chinese renewable energy certificates, and 212 MWh of power with
international renewable energy certificates.
Administrative penalties received for environmental issues during the reporting period
None
Other environmental information that should be disclosed
None
Other information related to environmental protection
None
II. Performance of Social Responsibility
During the reporting period, while the Company was committed to achieving its own development, it has also performed well in the
protection of the rights and interests of shareholders, creditors, employees, suppliers, clients and consumers, as well as in environmental
protection and sustainable development, public relations and social public welfare undertakings. For details, see the 2023
Environmental, Social and Governance (ESG) Report of Goertek Inc. released on "www.cninfo.com.cn" on March 28, 2024.
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III. Consolidate and Carry Forward the Achievements of Poverty Alleviation and Rural
Revitalization
For details, see the 2023 Environmental, Social and Governance (ESG) Report of Goertek Inc. released on "www.cninfo.com.cn" on
March 28, 2024.
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Section VI Important Matters
I. Fulfillment of Commitments
1. The commitments of the Company's actual controllers, shareholders, related parties, purchasers and companies that have been completely fulfilled
during the reporting period or remain valid by the end of the reporting period.
Applicable Not applicable
Commitment Commitment Commitment Performance of
Commitment matters Commitment party Commitment content
type time period commitments
Commitments made
during the joint-stock Not applicable
reform
Commitments made in
the report of acquisition
Not applicable
or in the report of equity
changes
Commitments made
Not applicable
during asset restructuring
Mr. Jiang Bin, the actual Mr. Jiang Bin and Mr. Jiang Long promise that the Company
Commitments made controller, and Mr. Jiang shares transferred each year during their tenure will not exceed
Commitment to October 8, Long-term
during initial public long, shareholder and the 25% of the total company shares held by them, and the shares Strictly fulfilled
restricted stock 2007 standing
offering or refinancing related party of the actual will not be transferred within six months after their resignation
controller in future
At present, there is no competition between the main
Mr. Jiang Bin and Ms. Hu businesses of Goertek Inc. and the commitment parties
Shuangmei, the actual (company and persons) in this clause or other entities
controllers of the Horizontal controlled by the commitment parties (company and persons).
Commitments made
Company, Goertek Group competition In future, in order to fundamentally avoid the possibility of October 8, Long-term
during initial public Strictly fulfilled
Co., Ltd and Mr. Jiang related competing with Goertek Inc., the commitment parties 2007 standing
offering or refinancing
Long, the shareholders commitment (company and persons) promise as follows: 1) The
who hold more than 5% commitment parties (company and persons) will not engage in
of the Company shares the same or similar business as Goertek Inc. in order to avoid
direct or indirect competition to the production and operation
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Commitment Commitment Commitment Performance of
Commitment matters Commitment party Commitment content
type time period commitments
of Goertek Inc. Efforts will be made to urge other entities
controlled by the commitment parties (company and persons)
not to directly or indirectly participate in or carry out any
business activity that compete with the production and
operation of Goertek Inc.
2) If the commitment parties (company and persons) and the
other entities controlled by the commitment parties (company
and persons) except Goertek Inc., have competitive businesses
of the same kind with Goertek Inc., which may bring unfair
impacts on Goertek Inc. in terms of market share, business
opportunities and resource allocation, etc. The commitment
parties (company and persons) and other entities controlled by
the commitment parties (company and persons) except
Goertek Inc. will voluntarily give up business competition
with Goertek Inc.
3) The commitment parties (company and persons) undertake
to give Goertek Inc. the pre-emption right on the purchase of
any assets and business to be sold, and will do its best to
ensure that the price of the transaction is determined on the
basis of fair, reasonable and normal commercial transactions
with independent third parties.
4) The commitment parties (company and persons) will not be
restricted from engaging in or continuing to engage in existing
production business, in particular to provide Goertek Inc. with
relevant materials and services needed for its operation. Since
the date of issuance of this letter of commitment, the
commitment parties (company and persons) undertake to
indemnify Goertek Inc. for any loss or expense suffered or
incurred in violation of any of the terms of this commitment.
From the
Stock option incentive plan of 2021: The Company undertakes
issuance date of
Stock option incentive Others not to provide loans or any other form of financial assistance
The Company April 16, 2021 the commitment Strictly fulfilled
commitments commitments to any participants to obtain relevant rights and interests under
to the completion
this incentive plan, including guarantee for their loans
of the
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Commitment Commitment Commitment Performance of
Commitment matters Commitment party Commitment content
type time period commitments
implementation
of the stock
option incentive
plan of 2021
From the
issuance date of
the commitment
Stock option incentive plan of 2022: The Company undertakes
to the completion
Stock option incentive Others not to provide loans or any other form of financial assistance
The Company July 8, 2022 of the Strictly fulfilled
commitments commitments to any participants to obtain relevant rights and interests under
implementation
this incentive plan, including guarantee for their loans
of the stock
option incentive
plan of 2022
From the
issuance date of
the commitment
Stock option incentive plan of 2023: The Company undertakes
to the completion
Stock option incentive Others not to provide loans or any other form of financial assistance
The Company July 19, 2023 of the Strictly fulfilled
commitments commitments to any participants to obtain relevant rights and interests under
implementation
this incentive plan, including guarantee for their loans
of the stock
option incentive
plan of 2023
From March 5,
From March 5, 2020 to the end of the use of the funds raised
2020 to the end
from convertible corporate bonds issuing or within 36 months
of the use of
after the funds raised are in place, the Company will no longer
Other commitments made Others funds raised or
The Company increase the funds usage in financial business (including March 5, 2020 Fully performed
to minority shareholders commitments within 36 months
capital investment, borrowing, guarantee and other forms of
after the funds
capital investment). The Company will not use the funds raised
raised are in
directly or in disguise for financial business
place
The Company's temporary use of some idle raised funds to During the time
Other commitments made Others November 21,
The Company supplement the working capital shall be used only for period of Fully performed
to minority shareholders commitments 2022
production and operation related to the main business. The temporary
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Commitment Commitment Commitment Performance of
Commitment matters Commitment party Commitment content
type time period commitments
Company shall not directly or indirectly use raised funds for liquidity
the subscription or placement of new shares, or for the trading replenishment
of shares and their derivatives, convertible bonds, etc. The with raised funds
Company undertakes that temporarily use of idle raised funds starting from
to supplement working capital shall be for daily production November 21,
and operation activities only. The Company will not use idle 2022
raised funds to directly or indirectly make high-risk
investments such as securities investment and derivatives
trading.
For the next 6
Not to reduce his holdings of company shares or engaging in
Mr. Jia Jun'an, Vice consecutive
Other commitments made Commitment to insider trading or short-swing trading within 6 months from September 23,
President, Board months from Fully performed
to minority shareholders restricted stock September 23, 2022, nor to buy or sell company stocks during 2022
Secretary September 23,
sensitive time periods.
2022
Within 12 months
from October 26,
Other commitments made All directors of the Commitment This share repurchase will not impair the Company's ability to October 26,
2023, or until the Strictly fulfilled
to minority shareholders Company on repurchase fulfill its debt obligations and continue as a going concern. 2023
completion of
this repurchase.
Whether the
commitments are fulfilled Yes
on time
If the commitments are
not fulfilled within the
time limit, specific
reasons for the failure of
Not applicable
complying and the work
plan for the next step
shall be explained in
details
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2. If the Company's assets or projects have profit forecasts and the reporting period is still in the profit
forecasting period, the Company shall make statement on whether the assets or projects reach the original
profit forecast and provide relevant reasons
Applicable Not applicable
II. Non-operational Occupation of Funds by Controlling Shareholders and Other Related
Parties to Listed Companies
Applicable Not applicable
During the reporting period of the Company, there is no non-operational occupation of funds by controlling shareholders or other
related parties to the Company.
III. External Guarantee in Violation of Regulations
Applicable Not applicable
The Company has no violation of external guarantee during the reporting period.
IV. Explanation made by the Board of Directors about the modified audit opinion for the
latest period
Applicable Not applicable
V. Explanation of the Accounting Firm's "Modified Auditor's Report" by the Board of
Directors, the Supervisory Board and Independent Directors (if Any) During the Reporting
Period
Applicable Not applicable
VI. Explanation of changes in Accounting Policies, Accounting Estimates or Correction of
Major Accounting Errors Compared with the Financial Report of Previous Year
Applicable Not applicable
See Section X (V) 39 "Changes in significant accounting policies and accounting estimates" for details
VII. Explanation of Changes in the Scope of the Consolidated Statements Compared with
Previous Year's Financial Report
Applicable Not applicable
During the reporting period, the Company acquired 3 subsidiaries through establishment. They are respectively Chongqing Goertek
Auto Technology Co., Ltd., Goertek Smart Technology Vina Co.,Ltd., and GMI Technology GmbH. The Company's holding subsidiary,
Goertek Optical Technology Co., Ltd., acquired 100% equity of Uphoton Technology (Shaoxing) Co., Ltd. The latter and its
subsidiaries are included in the consolidated statements.
During the reporting period, the Company deregistered 1 subsidiary: Kunshan Goertek Electronics Co., Ltd.
VIII. Appointment and Dismissal of Accounting Firms
Accounting firm currently appointed
Name of the domestic accounting firm Zhongxi CPAs(Special General Partnership)
Remuneration of the domestic accounting firm (unit: RMB
300
10,000)
Consecutive audit service years of the domestic accounting firm 5
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Name of certified public accountant of the domestic accounting
Du Yeqin, Zhang Shuli
firm
Consecutive audit service years of certified public accountant of Du Yeqin has been in service for 4 years, and Zhang Shuli for 2
the domestic accounting firm years
Name of overseas accounting firms (if any ) None
Remuneration of overseas accounting firms (unit: RMB 10,000)
0
(if any)
Consecutive audit service years of overseas accounting firms (if
None
any)
Names of certified public accountants of the overseas accounting
None
firms
Consecutive audit service years of certified public accountants of
None
overseas accounting firms (if any)
Whether to reappoint accounting firm in current period
Yes No
Employment of internal control audit accounting firms, financial consultants or sponsors
Applicable Not applicable
During the reporting period, the Company engaged Zhongxi CPAs (Special General Partnership) as the internal control audit accounting
firm and paid the internal control audit fee of RMB 800,000 that has been included in the total compensation of RMB 3 million paid
to Zhongxi CPAs (Special General Partnership).
IX. Delisting After the Disclosure of Annual Report
Applicable Not applicable
X. Bankruptcy or Reorganization Related Events
Applicable Not applicable
No bankruptcy or reorganization related events occurred during the reporting period.
XI. Significant Lawsuit and Arbitration Events
Applicable Not applicable
No significant litigation or arbitration events occurred during the reporting period.
XII. Punishment and Rectification
Applicable Not applicable
No punishment or rectification occurred during the reporting period.
XIII. Integrity Issues of the Company, Controlling Shareholders and Actual Controllers
Applicable Not applicable
XIV. Significant Related Party Transactions
1. Related party transactions related to daily operations
Applicable Not applicable
No significant related party transactions related to daily operations occurred during the reporting period.
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2. Related party transactions involving the acquisition or sale of assets or equity
Applicable Not applicable
No significant related party transactions involving the acquisition or sale of assets or equity occurred during the reporting period.
3. Related party transactions of joint external investment
Applicable Not applicable
No significant related party transactions of joint external investment occurred during the reporting period.
4. Related party transactions of credits and liabilities
Applicable Not applicable
Whether there are non-operating related creditor's rights and debts
Yes No
Creditor's rights receivable from related parties
None
Debt due to related parties
Increased Amount Interest in
Opening Closing
amount in the returned in the current
Relations with Cause of balance Interest balance
Related parties current period the current period
related party formation (RMB rate (RMB
(RMB period (RMB (RMB
10,000) 10,000)
10,000) 10,000) 10,000)
Controlling
Goertek Group Borrowing
shareholder of 0 1,100.00 0 3.45% 4.95 1,100.00
Co., Ltd. of funds
the Company
Impact of related parties' debts on
the Company's operating results No significant impact
and financial position
5. Business with affiliated financial company
Applicable Not applicable
There is no finance company that has a related party relationship with the Company.
6. Business between the related parties and the financial company controlled by the Company
Applicable Not applicable
There was no financial company controlled by the Company.
7. Other significant related party transactions
Applicable Not applicable
No other significant related party transactions occurred during the reporting period.
XV. Significant Contracts and Executions
1. Trusteeship, contracting and leasing
(1) Trusteeship
Applicable Not applicable
No trusteeship occurred during the reporting period.
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(2) Contracting
Applicable Not applicable
No major contracting occurred during the reporting period.
(3) Leasing
Applicable Not applicable
No significant leasing occurred during the reporting period.
2. Significant guarantees
Applicable Not applicable
Unit: RMB 10,000
External guarantee of the Company and its subsidiaries (excluding guarantees for subsidiaries)
Disclosure Whether
date of the The amount Actual Actual Counter- Whether the guarantee
Name of Guarantee Collateral Guarantee
amount limit limit of the occurrence amount guarantee guarantee is for
guaranteed party type (if any) period
of the guarantee date guaranteed (if any) complete related
guarantee parties
Not applicable
The Company's guarantee to its subsidiaries
Disclosure Whether
date of the The amount Actual Actual Counter- Whether the guarantee
Name of Guarantee Collateral Guarantee
amount limit limit of the occurrence amount guarantee guarantee is for
guaranteed party type (if any) period
of the guarantee date guaranteed (if any) complete related
guarantee parties
Joint
September
7,082.70 liability 1 year Yes No
10, 2022
guarantee
Joint
October 20,
7,082.70 liability 1 year Yes No
Goertek 2022
March 30, guarantee
(HongKong) Co., 177,067.50
2022 Joint
Limited May 17,
20,893.97 liability 1 year Yes No
2022
guarantee
Joint
May 24,
14,519.54 liability 1 year Yes No
2022
guarantee
Joint
June 22,
824.23 liability 1 year Yes No
2022
March 30, guarantee
65,000
2022 Joint
June 22,
105.86 liability 1 year Yes No
Goertek 2022
guarantee
Technology Vina
Joint
Company Limited April 18, September
20,681.48 4,907.44 liability 1 year No No
2023 1, 2023
guarantee
Joint
December 1, April 1,
339,969.6 91,289.28 liability 94 months No No
2021 2023
guarantee
Goertek Precision Joint
December 1, April 1,
Industry Vietnam 254,977.2 68,071.47 liability 94 months No No
2021 2023
Company Limited guarantee
Qingdao Goertek April 18, July 6, Joint
650 7.72 1 year No No
Horizons 2023 2023 liability
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Technology Co., guarantee
Ltd
Goertek Joint
March 30, November
Microelectronics 2,124.81 22.77 liability 1 year Yes No
2022 18, 2022
Inc. guarantee
Weifang Goertek Joint
March 30, May 12,
Microelectronics 300 10 liability 1 year Yes No
2022 2022
Co., Ltd. guarantee
Rongcheng
Joint
Goertek March 30, May 12,
300 0 liability 1 year Yes No
Microelectronics 2022 2022
guarantee
Co., Ltd.
Goertek Joint
April 18, November
Microelectronics 1,062.41 21.97 liability 1 year No No
2023 16, 2023
Inc. guarantee
Total amount of actual
Total amount of guarantee limit to
guarantee to subsidiaries
subsidiaries approved during the 429,642.39 214,839.65
occurred during the
reporting period (B1)
reporting period (B2)
Total balance of actual
Total amount of guarantee limit to
guarantee to subsidiaries
subsidiaries approved at the end 1,269,381.50 164,297.88
occurred at the end of the
of the reporting period (B3)
reporting period (B4)
The guarantee between subsidiaries
Disclosure Whether
date of the The amount Actual Actual Counter- Whether the guarantee
Name of Guarantee Collateral Guarantee
amount limit limit of the occurrence amount guarantee guarantee is for
guaranteed party type (if any) period
of the guarantee date guaranteed (if any) complete related
guarantee parties
Not applicable
Total amount of company guarantee (namely the sum of the previous three items)
Total amount of actual
Total amount of guarantee limit external guarantee
approved during the reporting 429,642.39 occurred during the 214,839.65
period (A1+B1+C1) reporting period
(A2+B2+C2)
Total balance of actual
Total amount of external
external guarantee
guarantee limit approved at the
1,269,381.50 occurred at the end of the 164,297.88
end of the reporting period
reporting period
(A3+B3+C3)
(A4+B4+C4)
The proportion of the total amount of actual guarantee (i.e.
5.33%
A4+B4+C4) to the net assets of the Company
Including:
Balance of guarantees for shareholders, actual controllers
0
and their affiliate parties (D)
Balance of guarantee provided directly or indirectly to the
7.72
parties with an asset-liability ratio of more than 70% (E)
Amount of total guarantees exceeding 50% of net assets (F) 0
Total amount of the above three kinds of guarantees
7.72
(D+E+F)
Explanation of unexpired guarantee contracts for which
there are guarantee liabilities or there are evidence showing
None
the possibility of joint and several liability for repayment
during the reporting period (if any)
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Description of external guarantees provided in violation of
None
prescribed procedures (if any)
Specific description of complex guarantees
None
3. Management trust of cash assets
(1) Entrusted financial investment
Applicable Not applicable
No major entrusted financial management occurred during the reporting period of the Company.
(2) Entrusted loans
Applicable Not applicable
No entrusted loans occurred during the reporting period.
4. Other major contracts
Applicable Not applicable
No other significant contracts occurred during the reporting period.
XVI. Explanation of Other Significant Matters
Applicable Not applicable
In accordance with the requirements of laws and regulations, the Company has disclosed the significant matters that occurred during
the reporting period on http://www.cninfo.com.cn, Securities Times, China Securities Journal, Shanghai Securities News and Securities
Daily. Other than that, no other significant matters occurred.
XVII. Significant Matters Occurred to Subsidiaries of the Company
Applicable Not applicable
On November 10, 2020, the Company held the 12th meeting of the 5th board of directors and the 10th meeting of the 5th Supervisory
Board, which approved The Proposal of Planning the Spin-off of the Holding Subsidiary. It agreed to plan and prepare the spin-off of
the Company's holding subsidiary Goertek Microelectronics Co., Ltd. For details, please see The Informative Announcement of Goertek
Inc. on Planning and Preparing the Spin-off of Holding Subsidiary issued on November 11, 2020.
The 17th meeting of the 5th board of directors and the 12th meeting of the 5th Supervisory Board were held on March 1, 2021 to
approve The Proposal on the Introduction of External Investors of the Holding Subsidiary and Affiliate Transactions. It agreed to
accept a total of RMB 2,149.987749 million capital investment from 15 external investors, including Qingdao Microelectronics
Innovation Center Co., Ltd., Mr. Tang Wenbo, Gongqingcheng Chunlin Equity Investment Partnership(L.P.), Qingdao Henghuitai
Industry Development Fund Co., Ltd., and Goertek Group Co., Ltd., in exchange of 10.4075% of Goermicro's equity after above capital
increase and share expansion. After the above investment, the percentage of shares of Goermicro held by the Company was diluted
from 95.8773% to 85.8989%, which did not change the accounting consolidation scope of the financial statements of the Company.
Details can be found in The Announcement of Goertek Inc. on the Introduction of External Investors of the Holding Subsidiary and
Affiliate Transactions issued on March 2, 2021.
On April 21, 2021, the Company held the 20th meeting of the 5th Board of Directors and the 15th meeting of the 5th Supervisory
Board, which approved The Proposal on 'Plan for the Spin-off of Goertek Microelectronics Inc., a subsidiary of Goertek Inc., for Listing
on the Growth Enterprise Board' and other related proposals. Details can be found in related announcements published in China
Securities Journal, Securities Times, Shanghai Securities News, Securities Daily and http://www.cninfo.com.cnon April 22, 2021.
On November 8, 2021, the Company held the 24th meeting of the 5th Board of Directors and the 19th meeting of the 5th Supervisory
Board, which approved The Proposal of 'Planning on the Spin-off of Goertek Microelectronics Inc. and Listing on the Growth
Enterprise Board of Shenzhen Stock Exchange (Revised)' and other related proposals. The above-mentioned proposals have been
reviewed and approved by the Company's first extraordinary general meeting of shareholders in 2021. Details can be found in related
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announcements published in China Securities Journal, Securities Times, Shanghai Securities News, Securities Daily and
http://www.cninfo.com.cn on November 9, 2021 and November 26, 2021.
On December 28, 2021, Goertek Microelectronics Inc. received The Notice of Acceptance of Application Documents for Initial Public
Offering of Shares and Listing on GEM of Goertek Microelectronics Inc. (Shenzhen Stock Exchange (2021) No. 549). In accordance
with related regulations, the Shenzhen Stock Exchange checked the application report and related application documents submitted by
Goertek Microelectronics Inc. for initial public offering and listing on GEM, and decided to accept the application. Details can be
found in The Informative Announcement of Goertek on The Acceptance of Shenzhen Stock Exchange of The Application Documents of
The Spin-off of Goertek Microelectronics Inc. and Listing on GEM issued by the Company on December 29, 2021.
According to the Announcement on the Results of the 74th Review Meeting of the GEM Listing Committee in 2022 issued by the
Shenzhen Stock Exchange on October 19, 2022, Goertek Microelectronics Inc. (IPO) meets the requirements for issuance, listing and
information disclosure.
On March 31, 2023, as the financial information recorded in the IPO application documents of Goertek Microelectronics Inc. had
expired, a supplementary submission was required. According to the relevant provisions of the Review Rules of Shenzhen Stock
Exchange for Stock Issuance and Listing, the review for issuance and listing review was suspended.
On June 26, 2023, the Shenzhen Stock Exchange resumed its IPO audit in accordance with Article 61 of the Rules for the Examination
of the Offering and Listing of Securities by Companies Listed on the Shenzhen Stock Exchange, following the completion of financial
information updates by Goertek Microelectronics Inc.
In October 2023, the Company purchased the 1.8468% shares held by Jiang Long, a minority shareholder of the subsidiary Goertek
Microelectronics Inc. using its own capital of RMB 23,273,750.00. After the transaction, the Company's shareholding in Goertek
Microelectronics Inc. was changed from 85.90% to 87.75%.
So far, Goertek Microelectronics Inc. is in the process of registering with the China Securities Regulatory Commission, and the audit
is proceeding as expected.
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Section VII Share Changes and Shareholder Information
I. Changes in Shares
1. Changes in shares
Unit: share
Before the change Increases or decreases (+, -) After the change
New Bonus Transferred
Number Percentage Other Sub-total Number Percentage
shares shares from reserves
I. Shares Subject to Selling
414,250,361 12.11% -7,089,534 -7,089,534 407,160,827 11.90%
Restrictions
1. State shareholding
2. Shares held by state-
owned corporates
3. Shares held by other
414,250,361 12.11% -7,089,534 -7,089,534 407,160,827 11.90%
domestic shareholders
Including: held by domestic
corporates
held by domestic individuals 414,250,361 12.11% -7,089,534 -7,089,534 407,160,827 11.90%
4. Shares held by foreign
shareholders
Including: held by foreign
corporates
held by foreign individuals
II. Shares Without Restrictions 3,006,152,839 87.89% 7,089,534 7,089,534 3,013,242,373 88.10%
1. RMB common shares 3,006,152,839 87.89% 7,089,534 7,089,534 3,013,242,373 88.10%
2. Domestic listed foreign
shares
3. Overseas listed foreign
shares
4. Others
III. Total Number of Shares 3,420,403,200 100.00% 3,420,403,200 100.00%
Reasons for changes in shares
Applicable Not applicable
Approval of changes in shares
Applicable Not applicable
Transfer of ownership change of shares
Applicable Not applicable
The impact of share changes on the financial indicators such as basic earnings per share, diluted earnings per share and net assets per
share attributable to the Company's common shareholders in the latest year and the latest period
Applicable Not applicable
Other content that the Company considers necessary or that the securities regulator requires to be disclosed
Applicable Not applicable
2. Changes in restricted shares
Applicable Not applicable
Unit: share
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Starting number Closing number
Increased in Type for
Name of of restricted Decreased in of restricted Date of the removal of
reporting restricted
shareholder shares in current period shares in restrictions
period shares
reporting period reporting period
Restricted
Unlock 25% of shares held
Jiang Bin 215,548,054 215,548,054 shares of senior
per annum
executives
Restricted 62,586,299 restricted
Jiang Long 187,758,898 62,586,299 62,586,299 187,758,898 shares of senior shares were released from
executives lock-up on October 6, 2023
Restricted 16,200,000 restricted
Hu
16,200,000 16,200,000 0 shares of senior shares were released from
Shuangmei
executives lock-up on May 13, 2023
Restricted 7,089,534 restricted shares
Sun Hongbin 7,089,534 7,089,534 0 shares of senior were released from lock-up
executives on May 15, 2023
Restricted
Unlock 25% of shares held
Duan Huilu 2,605,875 2,605,875 shares of senior
per annum
executives
Restricted 200,000 restricted shares
Jia Jun'an 600,000 200,000 200,000 600,000 shares of senior were released from lock-up
executives on October 23, 2023
Restricted
Unlock 25% of shares held
Liu Chunfa 648,000 648,000 shares of senior
per annum
executives
Total 430,450,361 62,786,299 86,075,833 407,160,827 - -
II. Issuance and Listing of Securities
1. Securities issuance (excluding preference shares) during the reporting period
Applicable Not applicable
2. Description of changes in the total number of shares, the structure of shareholders, and the structure of
assets and liabilities
Applicable Not applicable
3. Existing internal employee shares
Applicable Not applicable
III. Shareholders and actual controllers
1. Number of shareholders and corresponding shareholding
Unit: share
Total number Total number of
Total number of preference
Total number of of common preference
shareholders whose voting
common shareholders shareholders
rights were restored at the
shareholders at 386,707 as the end of 399,382 whose voting 0 0
end of the previous month
the end of the the previous rights were
before disclosure date of the
reporting period month before restored at the
annual report
disclosure end of the
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date of the reporting period
annual report (if any)
Shareholding of shareholders with more than 5% of shares or the top 10 shareholders (Excluding lending of shares through refinancing)
The number of Pledge or freeze status
Total common Increase/ The number of
common shares
Name of Type of shares held at the decrease during shares held
Percentage held with Share
shareholder shareholder end of the the reporting without trading Number
trading status
reporting period period restrictions
restrictions
Domestic non-
Goertek Group Not
state-owned 14.84% 507,680,170 0 0 507,680,170 0
Co., Ltd. applicable
corporation
Domestic Not
Jiang Bin 8.40% 287,397,406 0 215,548,054 71,849,352 0
Individual applicable
Domestic
Jiang Long 7.32% 250,345,197 0 187,758,898 62,586,299 Pledged 65,000,000
Individual
Hong Kong
Securities
Overseas Not
Clearing 3.29% 112,527,947 -12,047,341 0 112,527,947 0
corporation applicable
Company Ltd.
(HKSCC)
China Securities
Finance Not
Other 2.43% 83,044,011 0 0 83,044,011 0
Corporation applicable
Limited
Goertek Inc. -
Not
Home No. 6 Other 1.97% 67,338,040 67,338,040 0 67,338,040 0
applicable
ESOP
Domestic Not
Hu Shuangmei 0.47% 16,200,000 0 0 16,200,000 0
Individual applicable
Industrial and
Commercial
Bank of China
Limited - Huatai-
Pinebridge Not
Other 0.47% 15,936,093 7,090,800 0 15,936,093 0
CSI300 applicable
Exchange-
Traded Index
Securities
Investment Fund
Domestic Not
Pi Taotao 0.46% 15,762,700 1,662,700 0 15,762,700 0
Individual applicable
China Everbright
Bank Co., Ltd.-
Aegon-Industrial
Business Model Not
Other 0.44% 15,064,030 15,064,030 0 15,064,030 0
Preferred Hybrid applicable
Securities
Investment Fund
(LOF)
Strategic investors or general legal
entities who become the top 10
None
shareholders as a result of the
placement of new shares (if any)
Explanation of the association of Jiang Bin and Jiang Long are brothers. Jiang Bin and Hu Shuangmei are couple. Goertek Group Co., Ltd. is
the above shareholders or their controlled by Jiang Bin and Jiang Long; Goertek Inc. - Home No. 6 ESOP is the Company's ESOP; The Company
action in concert does not know whether the other top ten shareholders are related or acting in concert with each other.
Explanation on None
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entrustment/acceptance and waiver
of voting rights by the aforesaid
shareholders
Special notes on the existing special
account of securities repurchasing None
in the Top 10 shareholders (if any)
Shareholding of the top 10 shareholders with unlimited conditions of sale (Excluding lending of shares through refinancing)
Number of shares without sales restrictions held at the end of Type of shares
Name of shareholder
the reporting period Type of shares Number
Goertek Group Co., Ltd. 507,680,170 Ordinary shares in RMB 507,680,170
Hong Kong Securities Clearing
112,527,947 Ordinary shares in RMB 112,527,947
Company Ltd. (HKSCC)
China Securities Finance
83,044,011 Ordinary shares in RMB 83,044,011
Corporation Limited
Jiang Bin 71,849,352 Ordinary shares in RMB 71,849,352
Goertek Inc. - Home No. 6 ESOP 67,338,040 Ordinary shares in RMB 67,338,040
Jiang Long 62,586,299 Ordinary shares in RMB 62,586,299
Hu Shuangmei 16,200,000 Ordinary shares in RMB 16,200,000
Industrial and Commercial Bank of
China Limited - Huatai-Pinebridge
15,936,093 Ordinary shares in RMB 15,936,093
CSI300 Exchange-Traded Index
Securities Investment Fund
Pi Taotao 15,762,700 Ordinary shares in RMB 15,762,700
China Everbright Bank Co., Ltd.-
Aegon-Industrial Business Model
15,064,030 Ordinary shares in RMB 15,064,030
Preferred Hybrid Securities
Investment Fund (LOF)
Explanation on association or
action in concert among top 10
Jiang Bin and Jiang Long are brothers. Jiang Bin and Hu Shuangmei are couple. Goertek Group Co., Ltd. is
shareholders of shares without sales
controlled by Jiang Bin and Jiang Long; Goertek Inc. - Home No. 6 ESOP is the Company's ESOP; The
restrictions, or between top 10
Company does not know whether the other top ten shareholders are related or acting in concert with each other.
shareholders of shares without sales
restrictions and top 10 shareholders
Explanation on the top ten common At the end of the reporting period, the shares held by Goertek Group Co., Ltd., the controlling shareholder of
shareholders' participation in the the Company include the 150,000,000 shares held in the client credit transaction guarantee securities account of
financing and loan businesses of Southwest Securities Co., Ltd. At the end of the period, Pi Taotao held 15,762,700 shares of the Company
securities trades(if any) through the securities margin trading account.
Shareholding of top 10 shareholders involved in the securities refinancing transactions
Applicable Not applicable
Unit: share
Shareholding of top 10 shareholders involved in the Securities Lending Transactions
Shares involved in the Shares involved in the
Shareholding of the general
Securities Lending Shareholding of the general Securities Lending
account and credit account
Transactions that have not account and credit account Transactions that have not
at the beginning of the
Name of been returned at the at the end of the period been returned at the end
period
shareholder beginning of the period of the period
(full name) Percentage
Percentage of Percentage of Percentage of
Number in Number in Number in Number in of total
total share total share total share
total total total total share
capital capital capital
capital
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Industrial and
Commercial
Bank of China
Limited -
Huatai-
Pinebridge
8,845,293 0.26% 1,025,700 0.03% 15,936,093 0.47% 1,264,000 0.04%
CSI300
Exchange-
Traded Index
Securities
Investment
Fund
Changes in the top ten shareholders from the previous period
Applicable Not applicable
Unit: share
Changes in the top ten shareholders from the end of the previous period
Number of shares in the general account,
Number of shares involved in Securities
credit account, or involved in Securities
Lending Transactions that have not been
Name of shareholder Entry/Exit during Lending Transactions that have not been
returned at the end of the period
(full name) the reporting period returned at the end of the period
Percentage of total Percentage of total
Number in total Number in total
share capital share capital
National Social Exit
Security Fund 0 0.00% 0 0.00%
Portfolio 103
Chen Shihui Exit 0 0.00% 0 0.00%
Tian'an Life Exit
Insurance Co., Ltd. 0 0.00% 0 0.00%
- traditional products
Dajia Life Insurance Exit
Co., Ltd. 0 0.00% 0 0.00%
- universal products
Taiping Life Exit
0 0.00% 0 0.00%
Insurance Co., Ltd.
Goertek Inc. - Home Entry
0 0.00% 67,338,040 1.97%
No. 6 ESOP
Hu Shuangmei Entry 0 0.00% 16,200,000 0.47%
Industrial and Entry
Commercial Bank of
China Limited -
Huatai-Pinebridge
1,264,000 0.04% 17,200,093 0.50%
CSI300 Exchange-
Traded Index
Securities Investment
Fund
Pi Taotao Entry 0 0.00% 15,762,700 0.46%
China Everbright Entry
Bank Co., Ltd.-
0 0.00% 15,064,030 0.44%
Aegon-Industrial
Business Model
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Changes in the top ten shareholders from the end of the previous period
Number of shares in the general account,
Number of shares involved in Securities
credit account, or involved in Securities
Lending Transactions that have not been
Name of shareholder Entry/Exit during Lending Transactions that have not been
returned at the end of the period
(full name) the reporting period returned at the end of the period
Percentage of total Percentage of total
Number in total Number in total
share capital share capital
Preferred Hybrid
Securities Investment
Fund (LOF)
Whether the Company's top 10 common shareholders and top 10 common shareholders without share sales restrictions agreed on any
repurchase transaction in the reporting period
Yes No
None of the Company's top 10 common shareholders and top 10 common shareholders without share sales restrictions agreed on any
repurchase in the reporting period.
2. Particulars about the controlling shareholder
Nature of the controlling shareholder: Private corporate
Type of the controlling shareholder: Legal entity
Legal
Name of the controlling Date of
representative/Head Organization code Business scope
shareholder establishment
of the Company
Residential interior decoration; medical
services; technology import and export;
investing activities conducted with own
Goertek Group Co., funds; non-residential real estate
Jiang Bin April 24, 2001 913707007286084226
Ltd. leasing; technical services; wholesale of
edible agricultural products; tree
planting management; electronic
products sales, etc.
Shareholdings of the
controlling shareholder
None
in other listed
companies
Change of the controlling shareholders in the reporting period
Applicable Not applicable
No change on the controlling shareholder of the Company in the reporting period
3. Actual controllers of the Company and persons acting in concert with the actual controller
Nature of the actual controllers: Domestic individual
Type of the actual controllers: Individual
Relationship with the actual Whether he/she has obtained the right of
Name of the actual controller Nationality
controller residence in another country or region
Jiang Bin Himself China No
Hu Shuangmei Himself China No
Acting in concert (including
Jiang Long agreement, relative and China No
common control)
Main occupation and title Mr. Jiang Bin is currently the chairman of board of the Company; Mr. Jiang Long served as the
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Full Text of Goertek Inc. Annual Report 2023
vice chairman and president of the Company during the reporting period. (He resigned from the
above positions on April 6, 2023). Mr. Jiang Long is currently the senior consultant of the
Company
Information about other listed
companies at home and abroad Goertek Inc.
controlled in the last ten years
Change on the actual controllers in the reporting period
Applicable Not applicable
No change on the actual controllers of the Company in the reporting period
Block Diagram for Property Right and Control Relationship Between the Company and its Actual Controllers
Jiang Bin Hu Shuangmei
Goertek Group Co., Ltd.
Goertek Inc.
The actual controller controls the Company via trust or other ways of asset management
Applicable Not applicable
4. All the pledged shares account for 80% of the total shares held by the controlling shareholder or No.1
shareholder of the Company and their persons acting in concert
Applicable Not applicable
5. Particulars about other corporate shareholders with over 10% shares of the Company
Applicable Not applicable
6. Particulars on share sales restrictions for controlling shareholders, actual controllers, or other parties
involved in the reorganization of the Company or in any commitments related to the sales of share
Applicable Not applicable
IV. Specific Implementation of Share Repurchase in the Reporting Period
Progress of share repurchase
Applicable Not applicable
Proportion of
Number of Percentage Number repurchased shares
Disclosure Amount to be
shares to be of total Period of proposed Purpose of of to the underlying
time of the repurchased
repurchased share repurchase repurchase repurchas shares covered by
plan (RMB 10,000)
(share) capital es (share) the Stock Incentive
Plan (if any)
Within 12 months
50,000
from the date of For ESOP or
October 27, (inclusive) -
27,461,749 0.80% approval by the stock option 9,632,700
2023 70,000
Board of Directors incentive plan
(inclusive)
of this repurchase
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plan, unless the
relevant conditions
are met earlier, the
repurchase period
shall expire.
Note: As of the reporting date of this report, the Company has repurchased 34,205,700 shares through the continuous bidding
approach via the special securities repurchase account, accounting for 1.00% of the total share capital of the Company. The payment
amount (excluding transaction costs) is RMB 596,685,920.70.
The progress of repurchased shares reduction through centralized trading at competitive price
Applicable Not applicable
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Section VIII Preference Shares
Applicable Not applicable
There are no preference shares in the reporting period.
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Section IX Bonds
Applicable Not applicable
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Section X Financial Report
I. Auditor's Report
Auditor's Opinion Standard unqualified opinion
Auditor's Report Sign-off Date March 27, 2024
Name of the audit institution Zhongxi CPAs (Special General Partnership)
Auditor's Report Number Zhong Xi Cai Shen No. 2024S00362
Name of the Certified Public Accountant Du Yeqin, Zhang Shuli
Auditor's Report
Zhong Xi Cai Shen No. 2024S00362
To all the shareholders of Goertek Inc.,
I. Opinion
We have audited the accompanying financial statements of Goertek Inc. (hereinafter referred to as "Goertek"), including the
consolidated and Company's balance sheets as of December 31, 2023, consolidated and Company's income statements, consolidated
and Company's cash flow statements, consolidated and Company's statements of changes in shareholder' equity, and notes to the
financial statements for the year then ended.
In our opinion, the accompanying financial statements have been prepared in all material aspects in accordance with the Accounting
Standards for Business Enterprises, fairly reflecting the consolidated and Company's financial position as of December 31, 2023 and
of the consolidated and Company's financial performance and cash flows for 2023.
II. Basis for Opinion
We conducted our audit in accordance with the Auditing Standards for Certified Public Accountants of China. Our responsibilities
under those Standards are further described in the "Certified Public Accountants' Responsibilities for the Audit of the Financial
Statements" section of the auditor's report. We are independent of Goertek Inc. in accordance with the Code of Ethics for Certified
Public
Accountants of China ("Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditor's opinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, are of most significance in our audit of the financial statements
of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters. We determine that the following matters are critical
audit matters that need to be communicated in the audit report.
(I) Revenue recognition
1. Description of the matters
Goertek Inc. is mainly in the business of producing and selling electronic components, and for the accounting policy of revenue
recognition, please refer to ''32. Revenue '' in ''V. Significant Accounting Policies and Accounting Estimates'' of notes to the financial
statements. In 2023, the operating revenue in the consolidated financial statements of Goertek Inc. is RMB 98,573.90 million.
Revenue is one of the key performance indicators of Goertek Inc. and is the major source of profit of the Company, and the accuracy
and completeness of revenue recognition has a significant impact on the profits of the Company. Therefore, we identified the
recognition of Goertek Inc.'s revenue as a key audit matter.
2. Audit measures
We performed the following audit procedures in recognition of the operating revenue:
(1) Understood, evaluated and tested the design and operation effectiveness of internal control related to revenue recognition;
(2) Performed analytical review procedure to analyze the rationality of changes in the operating revenue and gross profits;
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(3) Identified the risk in the commodity ownership and the contractual terms related to remuneration transfer, evaluated whether the
accounting policies for revenue recognition in different modes were appropriate, and evaluated whether the time point for revenue
recognition of the Company was consistent with the requirements in the Accounting Standards for Business Enterprises by checking
the major sales contracts or orders, understanding the policies for receipt and return of goods, communicating with the management
and other procedures;
(4) Selected samples to check the sales contracts or orders, sales invoices, shipping orders, declarations for exportation, waybills
(receipt forms), bank slips and other supporting documents related to revenue recognition, and executed external confirmation
procedures on a sampling basis;
(5) Selected samples to reconcile the shipping orders, declarations for exportation, waybills (receipt forms) and other supporting
documents against the product sales revenue recognized before and after the balance sheet date to evaluate whether the revenue was
recognized in the appropriate accounting period.
(II) Goodwill impairment
1. Description of the matters
For the provision for impairment of goodwill, please refer to the accounting policy of "26. Impairment of Long-term Assets" in "(V)
Important accounting policies and accounting estimates" of notes to the financial statements for details. As of December 31, 2023, the
book value of goodwill was RMB 605.03 million, which mainly resulted from the goodwill generated from the acquisition of the
subsidiary Uphoton Technology (Shaoxing) Co., Ltd. in the current year, which amounted to RMB 588.17 million.
In accordance with the Accounting Standards for Business Enterprises, the Company's management performs an impairment test on
goodwill at the end of each year and adjusts the book value of goodwill based on the results of the impairment test. The process of
assessing goodwill impairment is complex. Predicting the recoverable amount involves estimating the present value of future cash
flows for the asset group. The management needs to make significant judgments and assumptions in its forecasts. The use of different
assumptions can have a significant impact on the assessment of the recoverable amount of goodwill, as they are affected by
management's judgment of the future market and economic environment.
Since the book value of goodwill has a significant impact on financial statements and the provision for impairment of goodwill requires
the management to make significant accounting judgments and estimates, we identified the impairment of goodwill as a key audit
matter.
2. Audit measures
We mainly implemented the following audit procedures for the impairment of goodwill:
(1) Understood, evaluated, and tested the design and operation effectiveness of internal control related to the impairment of goodwill;
(2) Review whether the management's determination of the asset group and allocation method for goodwill comply with the provisions
of the Accounting Standards for Business Enterprises;
(3) Assess the competency, professionalism, and objectivity of the external evaluation organization hired by the management;
(4) Discuss with the external evaluation institution the reasonableness of the evaluation method, key evaluation assumptions, parameter
selection, forecast of future income, and discount rate of cash flow used in the goodwill impairment test;
(5) Review the valuation method used for the asset group containing the goodwill and the evaluation report issued by the external
evaluation institution.
IV. Other Information
The Management of Goertek Inc. (the Management) is responsible for Other Information. Other Information includes information
covered in the 2023 Annual Report of Goertek Inc. but excludes financial statements and auditor's reports.
Our auditor's opinions on financial statements do not cover Other Information. We also do not express any kind of verification
conclusion on Other Information.
In combination with our audit of the financial statements, we're obliged to read the Other Information. In the process, we consider
whether the Other Information is materially inconsistent with the financial statements or the information we obtained during the audit,
or whether there is a material misstatement.
Based on the work that we have already done, if we conclude that the Other Information contains material misstatements, we should
report the fact. In this regard, we have nothing to report.
V. Responsibilities of Management and Governance for the Financial Statements
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The management of Goertek Inc. is responsible for the preparation and fair presentation of the financial statements in accordance with
the Accounting Standards for Business Enterprises, and for the design, implementation and maintenance of such internal control
necessary to ensure that the financial statements are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, Management is responsible for assessing the ability of Goertek Inc. to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Management intends
to liquidate Goertek Inc. or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the financial reporting process of Goertek Inc.
VI. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with the Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users made on the basis of these financial statements.
As part of an audit in accordance with the Auditing Standards, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
1. Identify and assess the risks of material misstatement of the financial statements due to fraud or error, design and perform audit
procedures to address those risks, and obtain audit evidence that is sufficient and appropriate as the basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than that resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit to design appropriate audit procedures.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by Management.
4. Conclude on the appropriateness of Management's use of the going concern basis of accounting. And, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Goertek Inc.'s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's
report to the related disclosures in the financial statements or, if such disclosures are inadequate, to express a qualified opinion. Our
conclusions are based on the information obtained up to the date of our auditor's report. However, future events or conditions may
cause Goertek Inc. to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the financial statements, and whether the financial statements fairly
represent the underlying transactions and events.
6. Obtain sufficient and appropriate audit evidence on the financial information of entities or business activities within Goertek Inc. to
express an opinion on the financial statements. We are responsible for the instruction, supervision and execution of the Group's audit,
and assume full responsibility for the auditor's opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence and communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence and, where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the
audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's
report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
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Zhongxi CPAs (Special General Certified Public Accountant in China
Partnership) (Engagement partner)
Du Yeqin
Beijing China Certified Public Accountant in China:
Zhang Shuli
March 27, 2024
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II. Financial Statements
The currency in the notes to the financial statements is: RMB
1. Consolidated Balance Sheet
Prepared by: Goertek Inc.
December 31, 2023
Unit: RMB
Item December 31, 2023 January 1, 2023
Current assets:
Cash at bank and on hand 14,737,312,329.71 12,682,871,091.80
Deposit reservation for balance
Lending funds
Financial assets held for trading 587,445,091.69 338,662,097.66
Derivative financial assets
Notes receivable 139,468,321.29 25,847,492.24
Accounts receivable 12,424,618,676.81 14,396,180,782.93
Financing receivables 9,059,230.11 22,375,874.12
Advances to suppliers 254,633,800.07 50,656,153.43
Premiums receivable
Reinsurance accounts receivable
Provision of cession receivable
Other receivables 89,261,417.90 96,442,803.18
Including: Interest receivable
Dividends receivable
Redemptory financial asset for sale
Inventories 10,794,894,394.42 17,348,670,744.58
Contract assets
Assets held for sale
Current portion of non-current assets 494,634,708.33 70,302,566.25
Other current assets 509,834,064.49 530,991,435.56
Total current assets 40,041,162,034.82 45,563,001,041.75
Non-current assets:
Loans and advances disbursed
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 760,220,882.07 361,008,671.83
Investments in other equity instruments 591,269,883.71 699,249,262.24
Other non-current financial assets 322,640,244.40 318,661,575.31
Investment properties
Fixed assets 22,305,456,354.63 21,459,756,268.25
Construction in progress 2,071,280,343.55 2,424,443,775.33
Bearer biological assets
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Item December 31, 2023 January 1, 2023
Oil and gas assets
Right-of-use assets 615,431,849.91 580,175,922.73
Intangible assets 3,280,071,024.41 2,720,793,670.68
Development costs 446,804,705.86 361,178,111.91
Goodwill 605,033,979.56 16,859,185.08
Long-term prepaid expenses 412,046,659.67 337,561,524.06
Deferred tax assets 1,609,355,102.73 1,461,726,750.47
Other non-current assets 683,636,375.83 964,135,835.23
Total non-current assets 33,703,247,406.33 31,705,550,553.12
Total assets 73,744,409,441.15 77,268,551,594.87
Current liabilities:
Short-term borrowings 5,214,491,316.62 7,120,846,026.67
Borrowings from banks and other
financial institutions
Borrowing funds
Financial liabilities held for trading 129,579,785.95 202,293,742.46
Derivative financial liabilities
Notes payable 4,538,354,620.68 4,850,498,246.08
Accounts payable 17,582,263,359.17 25,748,758,270.19
Advances from clients
Contract liabilities 3,472,638,215.20 2,295,347,547.31
Financial assets sold for repurchase
Client deposits and deposits from banks
and other financial institutions
Receiving from vicariously traded
securities
Receiving from vicariously sold
securities
Employee benefits payable 1,219,545,540.65 1,039,571,778.39
Taxes payable 120,856,054.02 284,911,767.58
Other payables 87,474,942.48 78,974,306.79
Including: Interest payable
Dividends payable
Handling charges and commissions
payable
Dividend payable for reinsurance
Liabilities held for sale
Current portion of non-current liabilities 1,072,169,260.73 1,095,618,327.74
Other current liabilities 4,718,260.10 4,252,178.60
Total current liabilities 33,442,091,355.60 42,721,072,191.81
Non-current liabilities:
Reserve fund for insurance contracts
Long-term borrowings 6,631,470,751.86 2,206,000,000.00
Debentures payable
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Item December 31, 2023 January 1, 2023
Including: Preference shares
Perpetual bonds
Lease liabilities 518,159,559.63 470,704,507.75
Long-term payables
Long-term employee benefits payable
Provisions
Deferred income 519,084,658.34 532,374,144.38
Deferred tax liabilities 757,980,175.34 906,537,829.44
Other non-current liabilities 348,058,624.72 172,261,037.39
Total non-current liabilities 8,774,753,769.89 4,287,877,518.96
Total liabilities 42,216,845,125.49 47,008,949,710.77
Shareholders' equity:
Share capital 3,420,403,200.00 3,420,403,200.00
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital surplus 8,998,372,370.61 10,280,659,251.03
Less: Treasury stock 278,530,746.47 2,291,973,146.75
Other comprehensive income -40,934,939.89 122,377,334.36
Specific reserve 1,551,313.67
Surplus reserve 1,665,066,603.96 1,446,536,121.51
General risk reserve 6,081,200.00 6,081,200.00
Undistributed profits 17,038,581,549.12 16,509,551,595.59
Total equity attributable to the owners of the
30,810,590,551.00 29,493,635,555.74
Company
Minority interests 716,973,764.66 765,966,328.36
Total shareholders' equity 31,527,564,315.66 30,259,601,884.10
Total liabilities and shareholders' equity 73,744,409,441.15 77,268,551,594.87
Legal representative: Principal in charge of accounting: Head of the accounting department:
Jiang Bin Li Yongzhi Li Yongzhi
2. Parent company balance sheet
Unit: RMB
Item December 31, 2023 January 1, 2023
Current assets:
Cash at bank and on hand 7,261,479,909.89 3,297,113,271.47
Financial assets held for trading 43,356,500.16 182,610,198.06
Derivative financial assets
Notes receivable 118,113,089.55 7,252,050.59
Accounts receivable 6,598,701,135.53 8,870,599,478.20
Financing receivables 14,606,619.59 20,812,233.59
Advances to suppliers 25,044,450.75 12,302,281.24
Other receivables 5,265,145,730.57 7,549,205,233.13
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Item December 31, 2023 January 1, 2023
Including: Interest receivable
Dividends receivable
Inventories 2,635,810,098.44 4,322,610,550.17
Contract assets
Assets held for sale
Current portion of non-current assets 494,634,708.33 70,184,291.67
Other current assets 97,125,290.56 150,596,159.89
Total current assets 22,554,017,533.37 24,483,285,748.01
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 9,126,400,831.64 6,761,368,254.99
Investments in other equity instruments
Other non-current financial assets 212,858,392.98 187,386,179.39
Investment properties
Fixed assets 8,821,843,731.49 10,645,143,425.63
Construction in progress 445,271,386.99 1,126,851,927.87
Bearer biological assets
Oil and gas assets
Right-of-use assets 223,664,825.78 280,327,936.71
Intangible assets 1,567,110,323.92 1,984,169,023.39
Development costs 369,518,862.88 241,947,146.57
Goodwill
Long-term prepaid expenses 34,955,204.06 20,436,053.45
Deferred tax assets 808,632,854.34 830,807,911.11
Other non-current assets 536,224,536.38 669,073,701.52
Total non-current assets 22,146,480,950.46 22,747,511,560.63
Total assets 44,700,498,483.83 47,230,797,308.64
Current liabilities:
Short-term borrowings 3,053,875,769.23 4,444,406,920.52
Financial liabilities held for trading 9,365,000.00 19,392,000.00
Derivative financial liabilities
Notes payable 4,648,667,927.19 4,648,250,141.38
Accounts payable 5,790,045,232.84 9,328,082,173.15
Advances from clients
Contract liabilities 683,902,938.19 1,005,783,290.09
Employee benefits payable 520,368,677.52 493,789,544.79
Taxes payable 28,220,254.58 40,037,090.10
Other payables 1,143,932,322.71 2,600,416,992.05
Including: Interest payable
Dividends payable
Liabilities held for sale
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Item December 31, 2023 January 1, 2023
Current portion of non-current liabilities 380,313,974.50 1,006,575,141.61
Other current liabilities 1,280,795.69 1,487,433.65
Total current liabilities 16,259,972,892.45 23,588,220,727.34
Non-current liabilities:
Long-term borrowings 4,894,000,000.00 2,206,000,000.00
Debentures payable
Including: Preference shares
Perpetual bonds
Lease liabilities 222,212,481.50 267,086,388.96
Long-term payables
Long-term employee benefits payable
Provisions
Deferred income 171,703,915.50 184,692,979.14
Deferred tax liabilities 400,038,411.93 578,621,000.58
Other non-current liabilities
Total non-current liabilities 5,687,954,808.93 3,236,400,368.68
Total liabilities 21,947,927,701.38 26,824,621,096.02
Shareholders' equity:
Share capital 3,420,403,200.00 3,420,403,200.00
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital surplus 6,909,206,304.38 8,421,030,014.05
Less: Treasury stock 278,530,746.47 2,291,973,146.75
Other comprehensive income -12,650.40
Specific reserve
Surplus reserve 1,665,063,821.56 1,446,533,339.11
Undistributed profits 11,036,440,853.38 9,410,182,806.21
Total shareholders' equity 22,752,570,782.45 20,406,176,212.62
Total liabilities and shareholders' equity 44,700,498,483.83 47,230,797,308.64
3. Consolidated income statement
Unit: RMB
Item 2023 2022
I. Revenue 98,573,902,273.14 104,894,324,162.26
Including: Operating revenue 98,573,902,273.14 104,894,324,162.26
Interest income
Earned premium
Total revenue from handling charges and
commissions
II. Total Operating Cost 97,795,818,309.31 101,718,859,767.81
Including: cost of sales 89,753,064,209.99 93,233,476,543.28
Interest expense
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Item 2023 2022
Handling charge and commission
expense
Surrender value
Net payments for insurance claims
Net amount of withdrawal of insurance
contract reserve
Expenditures of policy dividend
Amortized reinsurance expenditures
Taxes and surcharges 244,044,842.29 266,930,500.29
Selling expenses 528,150,303.42 548,298,842.05
General and administrative expenses 2,202,814,353.55 2,294,505,645.46
Research and development expenses 4,715,969,451.42 5,226,525,154.99
Financial expenses 351,775,148.64 149,123,081.74
Including: Interest expenses 544,691,878.33 303,539,076.90
Interest income 279,661,791.52 189,356,256.02
Add: Other income 372,861,056.96 373,205,863.18
Investment income ("-" for loss) -73,393,865.89 -36,243,969.62
Including: Investment income from
-28,435,998.08 2,298,237.32
associates and joint ventures
Gains or losses arising from
-5,724,287.70 -23,037,232.06
derecognised financial assets at amortised cost
Exchange gains ("-" for loss)
Net exposure hedging income ("-" for loss)
Gains on changes in fair value ("-" for loss) 115,909,152.44 -57,081,334.97
Credit impairment losses ("-" for loss) 17,395,066.06 -14,220,595.92
Asset impairment losses ("-" for loss) -299,625,741.31 -1,782,744,359.91
Gains on disposal of assets ("-" for loss) -2,037,658.52 -47,898,939.73
III. Operating Profit ("-" for loss) 909,191,973.57 1,610,481,057.48
Add: Non-operating income 34,817,135.08 21,477,460.44
Less: Non-operating expenses 152,852,797.95 122,730,370.49
IV. Total Profit ("-" for total losses) 791,156,310.70 1,509,228,147.43
Less: Income tax expenses -228,254,892.89 -281,790,237.36
V. Net profit ("-" for net loss) 1,019,411,203.59 1,791,018,384.79
(I) Classification by continuity of operations
1. Net profit from continuing operations ("-"
1,019,411,203.59 1,791,018,384.79
for net loss)
2. Net profit from discontinued operations ("-"
for net loss)
(II) Classification by ownership of the equity
1. Net profit attributable to the shareholders of
1,088,076,730.88 1,749,181,131.83
the Company
2. Minority interests -68,665,527.29 41,837,252.96
VI. Other comprehensive income, net of tax -161,476,471.40 225,089,038.47
Other comprehensive income, net of tax
-163,312,274.25 222,524,103.93
attributable to the shareholders of the Company
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Item 2023 2022
(I) Other comprehensive income items which
will not be reclassified subsequently to profit or -92,161,581.61 2,195,604.99
loss
1. Changes in remeasurement of defined
benefit plan
2. Shares of other comprehensive income of
the investee accounted for using equity method that
will not be subsequently reclassified to profit or
loss
3. Changes in fair value of investments in
-92,161,581.61 2,195,604.99
other equity instruments
4. Changes in fair value attributable to
change in the credit risk of financial liability
designated at FVPL
5. Others
(II) Other comprehensive income items which
-71,150,692.64 220,328,498.94
will be reclassified subsequently to profit or loss
1. Shares of other comprehensive income of
the investee accounted for using equity method that -12,650.40 -27,351,340.30
will be reclassified to profit or loss
2. Changes in fair value of other debt
investments
3. Shares of financial assets reclassified to
other comprehensive income
4. Provision for credit impairment of other
debt investments
5. Effective portion of gains or losses on
hedging instruments in a cash flow hedge
6. Translation differences on translation of
-71,138,042.24 247,679,839.24
foreign currency financial statements
7. Others
Net other comprehensive income, net of tax,
1,835,802.85 2,564,934.54
attributable to minority shareholders
VII. Total comprehensive income 857,934,732.19 2,016,107,423.26
Attributable to the shareholders of the Company 924,764,456.63 1,971,705,235.76
Attributable to minority shareholders -66,829,724.44 44,402,187.50
VIII. Earnings per share
(I) Basic earnings per share 0.32 0.52
(II) Diluted earnings per share 0.32 0.52
In case of combination of enterprises under common control during current period, the net profit before combination realized by
acquiree is RMB 0.00. The net profit realized by the acquiree in the previous period is RMB 0.00.
Legal representative: Principal in charge of accounting: Head of the accounting department:
Jiang Bin Li Yongzhi Li Yongzhi
4. Parent Company Income Statement
Unit: RMB
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Item 2023 2022
I. Revenue 28,761,890,617.55 42,977,392,050.91
Less: Cost of sales 24,341,394,089.94 37,992,035,039.68
Taxes and surcharges 124,703,875.55 166,468,610.77
Selling expenses 388,403,329.76 357,947,471.28
General and administrative expenses 1,688,533,595.04 1,883,669,477.96
Research and development expenses 2,298,748,673.83 2,842,072,542.12
Financial expenses 262,664,628.13 -286,250,474.81
Including: Interest expenses 339,586,343.34 244,537,695.61
Interest income 135,037,374.40 119,926,860.39
Add: Other income 62,665,388.48 59,312,468.45
Investment income ("-" for loss) 2,299,697,147.05 656,680,494.07
Including: Investment income from
-23,010,602.53 -7,694,836.13
associates and joint ventures
Gains or losses arising from
derecognised financial assets at amortised cost ("-" -313,191.66
for loss)
Net exposure hedging income ("-" for loss)
Gains on changes in fair value ("-" for loss) -81,515,891.85 81,215,298.02
Credit impairment losses ("-" for loss) 4,387,353.96 7,287,106.67
Asset impairment losses ("-" for loss) -71,056,486.81 -1,496,859,325.46
Gains on disposal of assets ("-" for loss) 245,214,426.66 -3,522,548.55
II. Operating Profit ("-" for loss) 2,116,834,362.79 -674,437,122.89
Add: Non-operating income 20,530,603.91 10,715,077.09
Less: Non-operating expenses 108,467,674.06 88,097,731.93
III. Total profit ("-" for total losses) 2,028,897,292.64 -751,819,777.73
Less: Income tax expenses -156,407,531.88 -393,042,246.95
IV. Net profit ("-" for net loss) 2,185,304,824.52 -358,777,530.78
(I) Net profit from continuing operations ("-" for
2,185,304,824.52 -358,777,530.78
net loss)
(II) Net profit from discontinued operations ("-"
for net loss)
V. Other comprehensive income, net of tax -12,650.40
(I) Other comprehensive income items which
will not be reclassified subsequently to profit or
loss
1. Changes in remeasurement of defined
benefit plan
2. Shares of other comprehensive income of
the investee accounted for using equity method that
will not be subsequently reclassified to profit or
loss
3. Changes in fair value of investments in
other equity instruments
4. Changes in fair value attributable to
change in the credit risk of financial liability
designated at FVPL
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Item 2023 2022
5. Others
(II) Other comprehensive income items which
-12,650.40
will be reclassified subsequently to profit or loss
1. Shares of other comprehensive income of
the investee accounted for using equity method that -12,650.40
will be reclassified to profit or loss
2. Changes in fair value of other debt
investments
3. Shares of financial assets reclassified to
other comprehensive income
4. Provision for credit impairment of other
debt investments
5. Effective portion of gains or losses on
hedging instruments in a cash flow hedge
6. Translation differences on translation of
foreign currency financial statements
7. Others
VI. Total comprehensive income 2,185,292,174.12 -358,777,530.78
VII. Earnings per share
(I) Basic earnings per share
(II) Diluted earnings per share
5. Consolidated statement of cash flows
Unit: RMB
Item 2023 2022
I. Cash flows from operating activities:
Cash received from sale of goods or rendering of
75,929,642,962.84 87,859,623,816.37
services
Net increase in client deposits and deposits from
banks and other financial institutions
Net increase in borrowings from banks and other
financial institutions
Net increase in borrowing funds from other
financial institutions
Cash receipts from original insurance contract
premium
Net cash received from reinsurance business
Net increase in deposits and investments from
policy holders
Cash received from for interests, fees and
commissions
Net increase in borrowing funds
Net increase in repurchase business funds
Net cash received from securities trading
brokerage
Refund of taxes and surcharges 2,261,673,960.35 3,177,120,800.53
105
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Item 2023 2022
Cash received relating to other operating
1,975,191,545.77 1,924,041,394.99
activities
Sub-total of cash inflow from operating activities 80,166,508,468.96 92,960,786,011.89
Cash paid for goods and services 59,071,783,992.11 70,912,862,925.28
Net increase in loans and advances to clients
Net increase in deposits with central bank and
other financial institutions
Payments of claims for original insurance
contracts
Net increase in lending funds
Cash paid for interests, fees and commissions
Cash payments of policy dividend
Cash paid to and on behalf of employees 8,776,104,462.25 9,048,023,602.48
Payments of taxes and surcharges 919,231,302.84 835,585,413.96
Cash paid relating to other operating activities 3,247,500,468.38 3,847,200,705.49
Sub-total of cash outflow from operating activities 72,014,620,225.58 84,643,672,647.21
Net cash flow from operating activities 8,151,888,243.38 8,317,113,364.68
II. Cash flows from investing activities
Cash received from disposal of investments 4,634,462,748.31 1,060,923,791.21
Cash received from returns on investments 60,793,940.52 9,371,384.39
Net cash received from disposal of fixed assets,
386,789,592.09 49,533,749.98
intangible assets and other long-term assets
Net cash received from disposal of subsidiaries
2,205,000.00 322,965.16
and other business units
Cash received relating to other investing
110,692,623.30 21,653,530.71
activities
Sub-total of cash inflow from investing activities 5,194,943,904.22 1,141,805,421.45
Cash paid to acquire fixed assets, intangible
6,949,791,208.28 8,090,107,306.38
assets and other long-term assets
Cash paid to acquire investments 5,298,074,936.07 2,118,347,402.73
Net increase in pledged loans
Net cash paid to acquire subsidiaries and other
457,663,281.50
business units
Cash paid relating to other investing activities 72,806,657.72 10,363,395.50
Sub-total of cash outflow from investing activities 12,778,336,083.57 10,218,818,104.61
Net cash flow from investing activities -7,583,392,179.35 -9,077,012,683.16
III. Cash flows from financing activities
Cash received from capital contributions 395,195,770.87
Including: Cash received from capital
contributions by minority shareholders of 276,358,071.55
subsidiaries
Cash received from borrowings 25,573,744,456.01 28,642,971,147.51
Cash received relating to other financing
3,504,945,799.09 2,683,899,988.02
activities
Sub-total of cash inflow from financing activities 29,078,690,255.10 31,722,066,906.40
106
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Item 2023 2022
Cash repayments of borrowings 23,316,046,943.91 25,446,211,817.27
Cash payments for distribution of dividends,
836,849,923.30 953,234,131.28
profits, or cash payments for interest expenses
Including: Cash payments for dividends and
profits to minority shareholders of the subsidiaries
Cash payments relating to other financing
3,151,308,744.66 3,314,992,485.44
activities
Sub-total of cash outflow from financing activities 27,304,205,611.87 29,714,438,433.99
Net cash flow from financing activities 1,774,484,643.23 2,007,628,472.41
IV. Effect of foreign exchange rate changes on cash
9,752,465.71 414,363,412.84
and cash equivalents
V. Net Increase in cash and cash equivalents 2,352,733,172.97 1,662,092,566.77
Add: Cash and cash equivalents at beginning of
10,799,993,468.81 9,137,900,902.04
year
VI. Cash and cash equivalents at end of year 13,152,726,641.78 10,799,993,468.81
6. Parent company cash flow statement
Unit: RMB
Item 2023 2022
I. Cash flows from operating activities:
Cash received from sale of goods or rendering of
31,268,693,118.12 44,433,843,690.52
services
Refund of taxes and surcharges 965,640,380.86 2,133,662,516.06
Cash received relating to other operating
257,945,473.34 444,026,016.74
activities
Sub-total of cash inflow from operating activities 32,492,278,972.32 47,011,532,223.32
Cash paid for goods and services 23,349,870,042.92 35,135,811,819.24
Cash paid to and on behalf of employees 3,681,964,108.86 4,730,047,823.61
Payments of taxes and surcharges 136,209,295.26 204,340,880.43
Cash paid relating to other operating activities 1,854,137,805.40 2,185,115,476.07
Sub-total of cash outflow from operating activities 29,022,181,252.44 42,255,315,999.35
Net cash flow from operating activities 3,470,097,719.88 4,756,216,223.97
II. Cash flows from investing activities
Cash received from disposal of investments 3,264,003,156.55 292,167,856.22
Cash received from returns on investments 2,387,913,891.50 650,503,164.62
Net cash received from disposal of fixed assets,
2,668,167,310.60 2,121,526,013.95
intangible assets and other long-term assets
Net cash received from disposal of subsidiaries
and other business units
Cash received relating to other investing
40,656,843,708.32 13,607,538,495.79
activities
Sub-total of cash inflow from investing activities 48,976,928,066.97 16,671,735,530.58
Cash paid to acquire fixed assets, intangible
2,957,290,194.36 5,264,058,543.36
assets and other long-term assets
Cash paid to acquire investments 5,640,909,149.45 1,586,419,475.27
107
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Item 2023 2022
Net cash paid to acquire subsidiaries and other
business units
Cash paid relating to other investing activities 38,368,792,587.00 17,199,579,824.51
Sub-total of cash outflow from investing activities 46,966,991,930.81 24,050,057,843.14
Net cash flow from investing activities 2,009,936,136.16 -7,378,322,312.56
III. Cash flows from financing activities
Cash received from capital contributions 118,837,699.32
Cash received from borrowings 16,889,444,099.91 24,900,350,751.32
Cash received relating to other financing
10,860,975,443.26 9,056,368,411.19
activities
Sub-total of cash inflow from financing activities 27,750,419,543.17 34,075,556,861.83
Cash repayments of borrowings 16,265,467,720.00 22,139,255,620.15
Cash payments for distribution of dividends,
680,133,116.84 882,706,689.89
profits, or cash payments for interest expenses
Cash payments relating to other financing
11,831,691,300.83 10,020,646,445.56
activities
Sub-total of cash outflow from financing activities 28,777,292,137.67 33,042,608,755.60
Net cash flow from financing activities -1,026,872,594.50 1,032,948,106.23
IV. Effect of foreign exchange rate changes on cash
4,961,350.31 59,283,372.51
and cash equivalents
V. Net Increase in cash and cash equivalents 4,458,122,611.85 -1,529,874,609.85
Add: Cash and cash equivalents at beginning of
1,950,415,593.45 3,480,290,203.30
year
VI. Cash and cash equivalents at end of year 6,408,538,205.30 1,950,415,593.45
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7. Consolidated statement of changes in shareholders' equity
Amount of current period
Unit: RMB
2023
Shareholders' equity attributable to the Company
Other equity
instruments
Item Other Minority Total shareholders'
Preference shares
Perpetual bonds
Less: Treasury Specific General risk Undistributed
Share capital Capital surplus comprehensive Surplus reserve Other Sub-total interests equity
stock reserve reserve profits
Other
income
I. Balance at
December 31, 3,420,403,200.00 10,280,659,251.03 2,291,973,146.75 122,377,334.36 1,446,536,121.51 6,081,200.00 16,507,798,239.34 29,491,882,199.49 765,942,754.69 30,257,824,954.18
2022
Add: Changes in
1,753,356.25 1,753,356.25 23,573.67 1,776,929.92
accounting policy
Corrections of
errors in previous
period
Other
II. Balance at
3,420,403,200.00 10,280,659,251.03 2,291,973,146.75 122,377,334.36 1,446,536,121.51 6,081,200.00 16,509,551,595.59 29,493,635,555.74 765,966,328.36 30,259,601,884.10
January 1, 2023
III. Changes in
Current Period ("- -1,282,286,880.42 -2,013,442,400.28 -163,312,274.25 1,551,313.67 218,530,482.45 529,029,953.53 1,316,954,995.26 -48,992,563.70 1,267,962,431.56
" for decrease)
(I) Total
comprehensive -163,312,274.25 1,088,076,730.88 924,764,456.63 -66,829,724.44 857,934,732.19
income
(II) Capital
invested and -1,290,364,092.98 -2,013,442,400.28 723,078,307.30 16,911,244.29 739,989,551.59
reduced by owners
1. Common shares
invested by 184,101,356.18 177,655,190.77 6,446,165.41 8,649,522.87 15,095,688.28
owners
2. Capital
contributed from
other equity
instrument holders
3. Amounts of 172,286,003.87 172,286,003.87 8,159,660.58 180,445,664.45
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2023
Shareholders' equity attributable to the Company
Other equity
instruments
Item Other Minority Total shareholders'
Preference shares
Perpetual bonds
Less: Treasury Specific General risk Undistributed
Share capital Capital surplus comprehensive Surplus reserve Other Sub-total interests equity
stock reserve reserve profits
Other
income
share-based
payments
recognized in
shareholders'
equity
4. Other -1,646,751,453.03 -2,191,097,591.05 544,346,138.02 102,060.84 544,448,198.86
(III) Profit
218,530,482.45 -559,046,777.35 -340,516,294.90 -340,516,294.90
distribution
1. Appropriation
218,530,482.45 -218,530,482.45
of surplus reserve
2. Appropriation
of general risk
reserve
3. Dividends to
owners or -340,516,294.90 -340,516,294.90 -340,516,294.90
shareholders
4. Other
(IV) Internal
carry-over of
shareholders'
equity
1. Capital surplus
converted into
capital (or share
capital)
2. Surplus reserve
converted into
capital (or share
capital)
3. Surplus reserve
for making up
losses
4. Carry-over
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2023
Shareholders' equity attributable to the Company
Other equity
instruments
Item Other Minority Total shareholders'
Preference shares
Perpetual bonds
Less: Treasury Specific General risk Undistributed
Share capital Capital surplus comprehensive Surplus reserve Other Sub-total interests equity
stock reserve reserve profits
Other
income
undistributed
profits from
defined benefit
plan changes
5. Carry-over
undistributed
profits from other
comprehensive
income
6. Other
(V) Specific
1,551,313.67 1,551,313.67 1,551,313.67
reserve
1. Withdrawal in
7,551,472.89 7,551,472.89 7,551,472.89
current period
2. Use in current -
-6,000,159.22 -6,000,159.22
period 6,000,159.22
(VI) Other 8,077,212.56 8,077,212.56 925,916.45 9,003,129.01
IV. Balance at
December 31, 3,420,403,200.00 8,998,372,370.61 278,530,746.47 -40,934,939.89 1,551,313.67 1,665,066,603.96 6,081,200.00 17,038,581,549.12 30,810,590,551.00 716,973,764.66 31,527,564,315.66
2023
Amount in previous period
Unit: RMB
111
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2022
Shareholders' equity attributable to the Company
Other equity
instruments
Item Other Minority Total shareholders'
Preference shares
Perpetual bonds
Less: Treasury Specific General risk Undistributed
Share capital Capital surplus comprehensive Surplus reserve Other Sub-total interests equity
stock reserve reserve profits
Other
income
I. Balance at
-
December 31, 3,416,321,036.00 9,478,106,194.30 2,291,973,146.75 1,446,536,121.51 6,081,200.00 15,372,823,358.48 27,327,747,993.97 603,640,714.30 27,931,388,708.27
100,146,769.57
2021
Add: Changes
in accounting
policy
Corrections of
errors in
previous
period
Other
II. Balance at
-
January 1, 3,416,321,036.00 9,478,106,194.30 2,291,973,146.75 1,446,536,121.51 6,081,200.00 15,372,823,358.48 27,327,747,993.97 603,640,714.30 27,931,388,708.27
100,146,769.57
2022
III. Changes in
Current Period
4,082,164.00 802,553,056.73 222,524,103.93 1,134,974,880.86 2,164,134,205.52 162,302,040.39 2,326,436,245.91
("-" for
decrease)
(I) Total
comprehensive 222,524,103.93 1,749,181,131.83 1,971,705,235.76 44,402,187.50 2,016,107,423.26
income
(II) Capital
invested and
4,082,164.00 858,469,728.22 862,551,892.22 117,995,183.97 980,547,076.19
reduced by
owners
1. Common
shares
4,082,164.00 209,719,886.13 213,802,050.13 179,264,458.74 393,066,508.87
invested by
owners
2. Capital
contributed
from other
equity
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instrument
holders
3. Amounts of
share-based
payments
648,749,842.09 648,749,842.09 10,626,166.45 659,376,008.54
recognized in
shareholders'
equity
4. Other -71,895,441.22 -71,895,441.22
(III) Profit
-668,411,117.00 -668,411,117.00 -668,411,117.00
distribution
1.
Appropriation
of surplus
reserve
2.
Appropriation
of general risk
reserve
3. Dividends
to owners or -668,411,117.00 -668,411,117.00 -668,411,117.00
shareholders
4. Other
(IV) Internal
carry-over of
shareholders'
equity
1. Capital
surplus
converted into
capital (or
share capital)
2. Surplus
reserve
converted into
capital (or
share capital)
3. Surplus
reserve for
making up
losses
4. Carry-over
undistributed
profits from
113
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defined benefit
plan changes
5. Carry-over
undistributed
profits from
other
comprehensive
income
6. Other
(V) Specific
reserve
1. Withdrawal
in current 9,450,078.52 9,450,078.52 9,450,078.52
period
2. Use in -
-9,450,078.52 -9,450,078.52
current period 9,450,078.52
(VI) Other -55,916,671.49 54,204,866.03 -1,711,805.46 -95,331.08 -1,807,136.54
IV. Balance at
December 31, 3,420,403,200.00 10,280,659,251.03 2,291,973,146.75 122,377,334.36 1,446,536,121.51 6,081,200.00 16,507,798,239.34 29,491,882,199.49 765,942,754.69 30,257,824,954.18
2022
8. Parent company statement of changes in shareholders' equity
Amount of current period
Unit: RMB
2023
Other equity instruments
Item Less: Treasury Other comprehensive
Share capital Preference Perpetual Capital surplus Specific reserve Surplus reserve Undistributed profits Other Total shareholders' equity
Other stock income
shares bonds
I. Balance at
December 31, 3,420,403,200.00 8,421,030,014.05 2,291,973,146.75 1,446,533,339.11 9,410,101,500.47 20,406,094,906.88
2022
Add: Changes in
81,305.74 81,305.74
accounting policy
Corrections of
errors in previous
period
Other
II. Balance at
3,420,403,200.00 8,421,030,014.05 2,291,973,146.75 1,446,533,339.11 9,410,182,806.21 20,406,176,212.62
January 1, 2023
III. Changes in
-1,511,823,709.67 -2,013,442,400.28 -12,650.40 218,530,482.45 1,626,258,047.17 2,346,394,569.83
Current Period ("-"
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2023
Other equity instruments
Item Less: Treasury Other comprehensive
Share capital Preference Perpetual Capital surplus Specific reserve Surplus reserve Undistributed profits Other Total shareholders' equity
Other stock income
shares bonds
for decrease)
(I) Total
comprehensive -12,650.40 2,185,304,824.52 2,185,292,174.12
income
(II) Capital
invested and -1,513,757,170.83 -2,013,442,400.28 499,685,229.45
reduced by owners
1. Common shares
177,655,190.77 -177,655,190.77
invested by owners
2. Capital
contributed from
other equity
instrument holders
3. Amounts of
share-based
payments
132,994,282.20 132,994,282.20
recognized in
shareholders'
equity
4. Other -1,646,751,453.03 -2,191,097,591.05 544,346,138.02
(III) Profit
218,530,482.45 -559,046,777.35 -340,516,294.90
distribution
1. Appropriation of
218,530,482.45 -218,530,482.45
surplus reserve
2. Dividends to
owners or -340,516,294.90 -340,516,294.90
shareholders
3. Other
(IV) Internal carry-
over of
shareholders'
equity
1. Capital surplus
converted into
capital (or share
capital)
2. Surplus reserve
converted into
capital (or share
115
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2023
Other equity instruments
Item Less: Treasury Other comprehensive
Share capital Preference Perpetual Capital surplus Specific reserve Surplus reserve Undistributed profits Other Total shareholders' equity
Other stock income
shares bonds
capital)
3. Surplus reserve
for making up
losses
4. Carry-over
undistributed
profits from
defined benefit
plan changes
5. Carry-over
undistributed
profits from other
comprehensive
income
6. Other
(V) Specific
reserve
1. Withdrawal in
4,789,872.64 4,789,872.64
current period
2. Use in current
-4,789,872.64 -4,789,872.64
period
(VI) Other 1,933,461.16 1,933,461.16
IV. Balance at
December 31, 3,420,403,200.00 6,909,206,304.38 278,530,746.47 -12,650.40 1,665,063,821.56 11,036,440,853.38 22,752,570,782.45
2023
Amount in previous period
Unit: RMB
2022
Other equity instruments Other
Item
Share capital Preference Perpetual Capital surplus Less: Treasury stock comprehensive Specific reserve Surplus reserve Undistributed profits Other Total shareholders' equity
Other
shares bonds income
I. Balance at
December 31, 3,416,321,036.00 7,706,634,091.21 2,291,973,146.75 1,446,533,339.11 10,437,290,148.25 20,714,805,467.82
2021
Add: Changes
in accounting
policy
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2022
Other equity instruments Other
Item
Share capital Preference Perpetual Capital surplus Less: Treasury stock comprehensive Specific reserve Surplus reserve Undistributed profits Other Total shareholders' equity
Other
shares bonds income
Corrections of
errors in
previous
period
Other
II. Balance at
January 1, 3,416,321,036.00 7,706,634,091.21 2,291,973,146.75 1,446,533,339.11 10,437,290,148.25 20,714,805,467.82
2022
III. Changes in
Current Period
4,082,164.00 714,395,922.84 -1,027,188,647.78 -308,710,560.94
("-" for
decrease)
(I) Total
comprehensive -358,777,530.78 -358,777,530.78
income
(II) Capital
invested and
4,082,164.00 714,395,922.84 718,478,086.84
reduced by
owners
1. Common
shares
4,082,164.00 114,831,273.32 118,913,437.32
invested by
owners
2. Capital
contributed
from other
equity
instrument
holders
3. Amounts of
share-based
payments
599,564,649.52 599,564,649.52
recognized in
shareholders'
equity
4. Other
(III) Profit
-668,411,117.00 -668,411,117.00
distribution
1.
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2022
Other equity instruments Other
Item
Share capital Preference Perpetual Capital surplus Less: Treasury stock comprehensive Specific reserve Surplus reserve Undistributed profits Other Total shareholders' equity
Other
shares bonds income
Appropriation
of surplus
reserve
2. Dividends
to owners or -668,411,117.00 -668,411,117.00
shareholders
3. Other
(IV) Internal
carry-over of
shareholders'
equity
1. Capital
surplus
converted into
capital (or
share capital)
2. Surplus
reserve
converted into
capital (or
share capital)
3. Surplus
reserve for
making up
losses
4. Carry-over
undistributed
profits from
defined benefit
plan changes
5. Carry-over
undistributed
profits from
other
comprehensive
income
6. Other
(V) Specific
reserve
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2022
Other equity instruments Other
Item
Share capital Preference Perpetual Capital surplus Less: Treasury stock comprehensive Specific reserve Surplus reserve Undistributed profits Other Total shareholders' equity
Other
shares bonds income
1. Withdrawal
in current 9,450,078.52 9,450,078.52
period
2. Use in
-9,450,078.52 -9,450,078.52
current period
(VI) Other
IV. Balance at
December 31, 3,420,403,200.00 8,421,030,014.05 2,291,973,146.75 1,446,533,339.11 9,410,101,500.47 20,406,094,906.88
2022
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III. Company Profile
Goertek Inc. (hereinafter referred to as ''the Company'' or ''Goertek'') was established on July 27, 2007, through an overall change of
WeiFang IEA Electro-Acoustic Co., Ltd. (hereinafter referred to as "IEA").
IEA, the predecessor of the Company, was a joint venture established by law on June 25, 2001. In May 2007, the Company was changed
to a domestic enterprise with the approval of the document of Wei Wai Jing Mao Wai Zi (2007) No. 172.
Based on the resolution of the 2nd extraordinary general meeting of IEA in 2007, held on June 26, 2007, Weifang Yitonggong
Electronics Co., Ltd (renamed as "Goertek Group Co., Ltd." in October 2016, hereinafter referred to as "Goertek Group") transferred
its 29.40 million shares in IEA to 17 natural persons including Jiang Bin and Jiang Long, Langfang Development Zone Yongzhen
Electronic Technology Co., Ltd. (hereinafter referred to as "Yongzhen Electronic") and Beijing Yirun Venture Capital Investment Co.,
Ltd (hereinafter referred to as "Yirun VCI").
On July 18, 2007, Goertek Group, Yongzhen Electronic, Yirun VCI and the 17 persons including Jiang Bin and Jiang Long jointly
entered into an initiator agreement, changing IEA as a whole to Goertek Acoustic Inc. in the form of initiation, in which the audited
net assets of IEA as of June 30, 2007, were taken as the capital contribution upon stock discount at a ratio of approximately 1:0.8
As approved by the document of China Securities Regulatory Commission [2008] No. 613, the principal underwriter CITIC Securities
Co., Ltd. issued 30 million common shares (A-shares) through offline inquiry and placement in combination with online subscription,
pricing, and issue, at the price of RMB 18.78 per share. The raised funds mentioned above were verified by Bandung Certified Public
Accountants Co., Ltd. which issued the capital verification report (Wan Kuai Ye Zi [2008] No. 19). The stocks of the Company were
listed and traded at Shenzhen Stock Exchange on May 22, 2008. The Company changed its registered capital to RMB 120 million and
completed the registration of industrial and commercial change on July 22, 2008.
As reviewed and approved at the Company's annual general meeting of 2008, held on April 17, 2009, the total share capital of the
Company, namely 120 million shares as of December 31, 2008, was taken as the basis to convert capital surplus to share capital. 10
bonus shares for every 10 shares were converted to all shareholders, and a total of 120 million bonus shares converted. Thus, the total
share capital of the Company was changed to 240 million shares. The above change in the registered capital has been verified by
Bandung Asia Certified Public Accountants Co., Ltd. which has issued the capital verification report (Wan Ya Kuai Ye Zi (2009) No.
2427), and the registration of industrial and commercial change was completed on July 20, 2009.
As reviewed and approved at the Company's annual general meeting of 2009, held on February 26, 2010, the total share capital of the
Company, namely 240 million shares as of December 31, 2009, was taken as the basis to convert capital surplus to share capital. 5
bonus shares for every 10 shares were converted to all shareholders, and a total of 120 million bonus shares were converted. Thus, the
total share capital of the Company was changed to 360 million shares. The above change in the registered capital has been verified by
Crowe Horwath Certified Public Accountants Co., Ltd. which has issued the capital verification report (Hao Hua Yan Zi [2020] No.
20). The registration of industrial and commercial change was completed on March 30, 2010.
As approved by the China Securities Regulatory Commission in its Reply on Approving Non-public Issuing of Stocks by Goertek
Acoustic Inc. (Zheng Jian Xu Ke [2010] No. 1255), on September 29, 2010, the Company had the principal underwriter CITIC
Securities Co., Ltd. to issue 15.791275 million (A-shares) to 5 specific entities through private issuing at the price of RMB 33.01 per
share. The net amount of actual raised funds was RMB 506.21998775 million. The raised funds above have been verified by Crowe
Horwath Certified Public Accountants Co., Ltd. which has issued the capital verification report (Hao Hua Yan Zi [2010] No. 90. The
Company changed its registered capital to RMB 375.791275 million and completed the registration of industrial and commercial
change on December 13, 2010.
As reviewed and approved at the Company's annual general meeting of 2010, held on May 25, 2011, the total share capital of the
Company, namely 375.791275 million shares as of December 31, 2010, was taken as the basis to convert capital surplus to share capital.
10 bonus shares for every 10 shares were converted to all shareholders, and a total of 375.791275 million bonus shares were converted.
Upon such conversion, the total share capital of the Company was changed to 751.582550 million shares. The above change in the
registered capital has been verified by Crowe Horwath Certified Public Accountants Co., Ltd. which has issued the capital verification
report (Guo Hao Yan Zi [2011] No. 49), and the registration of industrial and commercial change was completed on June 24, 2011.
As approved by the China Securities Regulatory Commission in its Reply on Approving Non-public Issuing of Stocks by Goertek
Acoustic Inc. (Zheng Jian Xu Ke [2012] No. 108), GF Securities Co., Ltd. issued 96.434183 million shares (A-shares) in RMB to 10
specific entities through private issuing at the price of RMB 24.69 per share, and the net amount of actual raised funds was RMB
2,320.77885875 million. The raised funds mentioned above have been verified by Crowe Horwath Certified Public Accountants Co.,
Ltd. (Special General Partnership) which has issued the capital verification report (Guo Hao Yan Zi [2012] No. 408A14). The Company
changed its registered capital to RMB 848,016,733 and completed the registration of industrial and commercial change on May 7, 2012.
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As reviewed and approved at the Company's annual general meeting of 2012 held on May 9, 2013, the Company's total share capital
of 848,016,733 shares as of December 31, 2012, was taken as the basis for distributing cash dividends of RMB 1.5 (tax inclusive) for
every 10 shares to all the shareholders, with cash dividends of RMB 127,202,509.95 in total. The Company also converted capital
surplus to share capital, and 8 bonus shares for every 10 shares were converted to all shareholders, with a total of 678,413,386 shares
converted. Upon such conversion, the total share capital of the Company was changed to 1,526,430,119 shares. The above change in
the registered capital has been verified by Crowe Horwath Certified Public Accountants Co., Ltd. (Special General Partnership) which
has issued the capital verification report (Guo Hao Yan Zi [2013] No. 408A0001). The registration of industrial and commercial change
was completed on June 19, 2013.
On June 2, 2016, Goertek Acoustic Inc. changed its name to Goertek Inc. As the holder of the convertible bonds of the Company
requested conversion of shares, the registered capital of the Company was changed to RMB 1,526,581,348. The scope of business was
changed to development, manufacturing and sales of: Acoustic, optical and wireless communication technologies and related products,
robots and automation equipment, intelligent electromechanical and information products, precision molds for electronic products,
precision hardware, semiconductor products and MEMS products, consumer electronics, LED package and relevant application
products; development and sales of the software related to the above products; services related to the above technologies and products;
import and export of goods and technologies (excluding radio transmission and satellite receiving equipment, and excluding the items
prohibited by the national laws and regulations). (For the items requiring approval by law, business activities may only be conducted
in respect thereof upon approval of relevant departments)
As reviewed and approved at the Company's annual general meeting of 2016, held on April 14, 2017, the Company's total share capital
of 1,538,642,707 shares as of April 27, 2017, on which the profit distribution equity of the Company was registered, was taken as the
basis for the distribution of cash dividends RMB 1.5 (tax inclusive) for every 10 shares to all the shareholders, with a total of RMB
230,796,406.05 distributed. The Company also converted capital surplus to share capital, and 10 bonus shares per every 10 shares were
converted to all shareholders.
According to the Proposal on Redemption of ''Goertek Convertible Bonds'' reviewed and approved at the 8th meeting of the 4th Board
of Directors held by the Company on May 23, 2017, it was resolved to exercise the conditional redemption right of ''Goertek Convertible
Bonds'' to redeem all the unconverted ''Goertek Convertible Bonds'' at the price of the par value of the bonds plus the accrued interest
for the corresponding period. ''Goertek Convertible Bonds'' was no longer traded and converted from June 30, 2017. After the above
change, the Company changed its registered capital to RMB 3,245,103,948, and completed the registration of industrial and commercial
change on November 3, 2017.
According to the Proposal on Early Redemption of ''Goertek Convertible Bonds No. 2'' reviewed and approved at the 13th meeting of
the 5th Board of Directors and the 11th meeting of the 5th Supervisory Board held by the Company on January 15, 2021, it was resolved
to exercise the conditional redemption right of ''Goertek Convertible Bonds No. 2'' to redeem all the ''Goertek Convertible Bonds No.
2'', at the price of the par value of the bonds plus the accrued interest. As of March 3, 2021, ''Goertek Convertible Bonds No. 2'' was
no longer traded and converted. After the above change, the Company changed its registered capital to RMB 3,416,321,036, and
completed the registration of industrial and commercial change on June 22, 2021.
The Company's initial grant of certain stock options under the 2021 Stock Option Incentive Plan entered its first exercise period on
June 24, 2022. Due to employees' exercise of the right, the Company issued 4,082,164 A-shares to the incentive targets. The share
capital of the Company has been changed to RMB 3,420,403,200.
The registered address of the Company headquarters: 268 Dongfang Road, Weifang Hi-Tech Industrial Development Zone.
The main businesses of the Company and its subsidiaries (collectively referred to as the "Group") include precision components
business, smart audio device business and smart hardware business which are categorized into the industry of the manufacturing of
computers, communication, and other electronic equipment. The Company operates mainly in consumer electronics, automotive
electronics and other industries, with the main products including acoustics, optics, microelectronics, structural components and other
precision components, as well as smart hardware products such as virtual reality (VR)/mixed reality (MR)/augmented reality (AR)
products, TWS smart earphones, smart wearable devices, gaming console and accessories, and smart home products.
These financial statements have been approved by the Board of Directors of the Company on March 27, 2024.
As of December 31, 2023, the Group has included a total of 68 subsidiaries into its scope of consolidation, and for details, please refer
to Note X "Equity in Other Entities". In terms of consolidated scope, the Group gained 12 subsidiaries and disposed of 1 subsidiary in
the current period compared with the previous year. For details, please refer to Note IX "Changes in the Scope of Consolidation"..
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IV. Basis for Preparing the Financial Statement
1. Basis for the preparation
The Group has prepared the financial statements on a going concern basis, based on the actual transactions and matters in accordance
with The Accounting Standards for Business Enterprises - Basic Standards (issued by Order No. 33 of the Ministry of Finance and
amended by Order No. 76 of the Ministry of Finance) issued by the Ministry of Finance, 42 specific accounting standards, application
guidelines of accounting standards for business enterprises, explanations on the accounting standards for business enterprises and other
related regulations (hereinafter collectively referred to as "Accounting Standards for Business Enterprises") issued and amended on or
after 15 February 2006, and Preparation Rules for Information Disclosure by Companies Offering Securities to the Public No. 15 -
General Provisions on Financial Reports (2023 Revision) issued by CSRC.
According to relevant provisions in the Accounting Standards for Business Enterprises, the Group's accounting is based on the accrual
basis. These financial statements are prepared on the basis of historical cost, except for certain financial instruments. In case of asset
impairment, the appropriate impairment provision shall be accrued according to relevant regulations.
2. Continue as a going concern
The Company evaluated its ability to continue as a going concern for 12 months after the end of the current reporting period, without
matters or circumstances causing significant doubt over the ability to continue as a going concern. Therefore, these financial statements
were prepared on a going concern basis.
V. Significant Accounting Policies and Accounting Estimates
Notes to specific accounting policies and accounting estimates:
The Group has formulated several specific accounting policies and accounting estimates in respect of the revenue recognition, research
and development costs, and other transactions and matters, according to the provisions of relevant Accounting Standards for Business
Enterprises on the basis of the actual production and operation characteristics. For details, please refer to the descriptions in 32.
"Revenue" and 25 "intangible assets (2)" of Note V. For explanation on the major accounting judgments and estimates made by the
management, please refer to 38. "Other important accounting policies and accounting estimates" of Note V.
1. Statement of compliance with Accounting Standards for Business Enterprises
The financial statements have been prepared by the Group in compliance with the requirements of the Accounting Standards for
Business Enterprises, and give a true and complete view of the financial status of the Company and the Group as at December 31, 2023,
as well as the business performance, and cash flows and other relevant information for the year 2023. In addition, the financial
statements of the Company and the Group comply in all material aspects with the requirements concerning disclosure of the financial
statements and the notes specified in Preparation Rules for Information Disclosure by Companies Offering Securities to the Public No.
15 - General Provisions on Financial Reports (2023 Revision) by CSRC.
2. Accounting period
The accounting period of the Group is divided by annual accounting period and interim accounting period. Interim accounting period
means a reporting period that is shorter than a complete accounting year. The Company adopts the calendar year as its accounting year,
namely January 1 to December 31 of each year.
3. Business cycle
The normal business cycle means the period from the Group's purchase of the assets for processing to realization of cash or cash
equivalents. The Group takes 12 months as a business cycle and adopts the business cycle as liquidity classification standard for assets
and liabilities.
4. Functional currency
RMB is the currency in the main economic environment in which the Company and its domestic subsidiaries are operated, and the
Company and its domestic subsidiaries take RMB as the functional currency. Goertek (HongKong) Co., Limited, Goertek Technology
(Hong Kong) Co., Limited, Goertek Microelectronics (Hong Kong) Co., Ltd., Optimas Capital Partners Fund LP, and Goertek
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Microelectronics Holdings Co., Ltd. use USD as their functional currency, and all other overseas subsidiaries of the Company take the
lawful currency of the country or region where their registered addresses are located as their functional currency. The currency adopted
by the Group in preparing these financial statements is RMB.
5. Determination method and selection basis of materiality criteria
Applicable Not applicable
Item Materiality criteria
The amount of provision for bad debts on an individual basis accounts for more
Significant provision for bad debts on an
than 10% of the total amount of bad debt provisions for receivables and is more
individual basis
than RMB 10 million
Significant prepayments with an aging of more Prepayments with an aging of more than one year account for more than 10%
than one year of the total prepayments and the amount is more than RMB 10 million
Individual budget greater than RMB 100 million and accumulated carrying
Significant construction in progress
amount greater than RMB 50 million
The individual amount accounts for more than 10% of the total goodwill and is
Significant goodwill
greater than RMB 100 million
Accounts payable with an aging of more than one year account for more than
Significant accounts payable aged over one year
10% of the total accounts payable and the amount is more than RMB 10 million
Contract liabilities with an aging of more than one year account for more than
Significant contract liabilities aged over one year
10% of the total contract liabilities and the amount is more than RMB 10 million
Other payables with an aging of more than one year account for more than 10%
Significant other payables aged over one year
of the total other payables and the amount is more than RMB 10 million
An individual investment activity accounts for more than 10% of the total cash
Significant investment activities inflow or outflow related to the investment activity received or paid, and the
amount is more than RMB 500 million
The balance of an individual capitalized R&D project accounts for 10% of the
Significant capitalized R&D projects
total development expenditure and is greater than RMB 50 million
The total assets or revenue of a non-wholly-owned subsidiary accounts for more
Significant non-wholly-owned subsidiaries
than 10% of those of the Group
Significant joint ventures and associated The value of an individual investment accounts for more than 2% of the total
enterprises assets of the Group and the amount is more than RMB 500 million
6. Accounting treatments for business combination of enterprises under and not under common control
Business combination means the transaction or matter in which two or more separate enterprises are combined into one reporting entity.
Business combination is divided into business combination of enterprises under common control and business combination of
enterprises not under common control.
(1) Business combination involving enterprises under common control
Business combination involving enterprises under common control is the combination in which enterprises combined are controlled
by the same party or parties before and after the combination, and such control is not temporary. In the business combination of
enterprises under common control, the party which acquires the control of other enterprises in the business combination is the acquirer
and the other enterprises in the business combination are the combined parties. Business combination date is the date on which the
acquirer actually acquires the control of the acquirees.
The assets and liabilities acquired by the acquirer are measured on the basis of book value of acquirees on business combination date.
The difference between the book value of the net assets acquired by the acquirer and the book value of the consideration paid for the
combination (or total par value of the shares issued) is adjusted to capital surplus (share capital premiums). Adjustments shall be made
to undistributed profits in the event that the capital surplus (share capital premiums) are not sufficient for write-down.
Any direct costs incurred by the acquirer as a result of the business combination are recognized in the profit or loss for current period
when incurred.
(2) Business combination of enterprises not under common control
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Business combination of enterprises not under common control is the combination in which the enterprises combined are not controlled
by the same party or parties before and after the business combination. In the business combination of enterprises not under common
control, the party which acquires the control of other enterprises in the business combination on the acquisition date is the acquirer and
the other enterprises in the business combination are the acquired parties. Acquisition date is the date on which the acquiring party
actually acquires the control of the acquired parties.
In the business combination of enterprises not under common control, the cost of combination includes the fair value of assets paid,
liabilities incurred or assumed and equity securities issued by the acquiring party in exchange for the control of the acquired parties on
the acquisition date, the audit, legal service, assessment, consulting and other intermediate fees incurred for business combination of
enterprises, and other management fees, which are recognized in the profit or loss for the current period when incurred. The costs of
the acquiring party for issuing equity or debt securities as part of the business consideration for the business combination are included
in the initially recognized amount of these equity or debt securities. The contingent business consideration shall be included in the
combination cost at its fair value on the acquisition date, and the goodwill shall be adjusted and combined accordingly if the contingent
consideration needs to be adjusted when new or further evidences arise in connection with the circumstances existing on the acquisition
date within 12 months after the acquisition date. The acquisition cost incurred by the acquiring party and the identifiable net assets
acquired in the business combination shall be measured at the fair value on the acquisition date. If the combination cost is higher than
the fair value of the identifiable net assets acquired from the acquired parties on the acquisition date, the difference thereof shall be
recognized as the goodwill. If the combination cost is lower than the fair value of the identifiable net assets acquired from the acquired
parties in the business combination, the fair value of the identifiable assets, liabilities and contingent liabilities as well as the
measurement of the combination cost shall be first reviewed. If upon review, the combination cost is still lower than the fair value of
the identifiable net assets acquired from the acquired parties in the business combination, such difference shall be recognized in the
profit or loss for current period.
If the deductible temporary difference acquired by the acquiring party from the acquired parties is not recognized for failure to meet
the conditions for recognition of the deferred tax assets on the acquisition date, and if new or further information is obtained within 12
months after the acquisition date, showing that relevant circumstances on the acquisition date have already existed and it is expected
that the economic benefits brought about by the deductible temporary difference of the acquiring party on the acquisition date may be
realized, relevant deferred tax assets shall be recognized and the goodwill shall be reduced. If the goodwill is insufficient for write-
down, the difference will be recognized in the profit or loss for current period. In addition to the above condition, the deferred tax
assets recognized in connection with the combination of enterprises shall be recognized in the profit or loss for current period.
If the business combination of enterprises not under common control is realized step by step through multiple transactions, whether
such transactions fall within a "package deal" shall be judged according to the standards for judgment of "package deal" in the Notice
by the Ministry of Finance of Issuing the Interpretation No. 5 of the Accounting Standards for Business Enterprises (Finance and
Accounting [2012] No. 19) and Article 51 of the Accounting Standards for Business Enterprises No. 33 - Consolidated Financial
Statements (see 7(2) of Note V). If they fall within "package deal", see the description in the previous paragraphs of this part and "19.
Long-term equity investments" of Note V for accounting treatment. If they do not fall within "package deal", relevant accounting
treatment shall be distinguished for individual financial statements and consolidated financial statements:
In the individual financial statements, the sum of the book value of the equity investment of the acquired parties held before the
acquisition date and the increased investment cost on the acquisition date shall be taken as the initial investment cost of such investment.
If other comprehensive income is involved in the equity of the acquired parties held before the acquisition date, the accounting treatment
of other comprehensive income while disposing such investment, shall be conducted on the same basis as the direct disposal of related
assets or liabilities by the acquired parties.
In the consolidated financial statements, the equity of the acquired parties held before the acquisition date shall be remeasured at the
fair value of such equity on the acquisition date, and the difference between the fair value and its book value shall be recognized in
investment income in current period. If other comprehensive income is involved in the equity of the acquired parties held before the
acquisition date, the accounting treatment of other comprehensive income related, shall be conducted on the same basis as the direct
disposal of related assets or liabilities by the acquired parties.
7. Judgment criteria for control and method for preparing the consolidated financial statements
(1) Principles for determination of the scope of consolidated financial statements
The scope of the consolidation of consolidated financial statements shall be determined on the basis of control. Control means that the
Group enjoys variable returns through its power in the invested parties and its participation in relevant activities of the invested parties,
and is able to influence the amount of such returns by applying its power in the invested parties. The Company and all its subsidiaries
are included in the scope of consolidation. Subsidiary means the entity controlled by the Group.
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The Group shall launch re-assessment, if the changes in relevant facts and circumstances that lead to changes in relevant elements of
the above control definition occur.
(2) Method for preparing the consolidated financial statements
The Company shall include the subsidiaries into the scope of consolidation from the date when it obtains the net assets and actual
control over the production and operation decisions of the subsidiaries. It shall cease to do so as of the date when the actual control is
lost. For the disposal subsidiaries, the business performance and cash flows prior to the disposal date have been appropriately included
in the consolidated income statement and consolidated statement of cash flows. The opening balance of the consolidated balance sheets
shall not be adjusted for the subsidiaries disposed in current period. For the subsidiaries added through the combination of enterprises
not under common control, the business performance and cash flows have been appropriately included in the consolidated income
statement and consolidated cash flow statement after acquisition date. The opening balance and comparative figures of consolidated
financial statements shall not be adjusted. For the subsidiaries added during combination of enterprises under common control and the
subsidiaries under absorption combination, the business performance and cash flows, from the beginning of current period to
acquisation date, have been appropriately included in consolidated income statement and consolidated cash flow statement. The
comparison figures in the consolidated financial statements shall be adjusted at the same time.
In preparing the consolidated financial statements, if the accounting policies or accounting periods of the subsidiaries are different from
those of the Company, the financial statements of the subsidiaries shall be adjusted based on the accounting policies and accounting
periods of the Company. The individual financial statements of the subsidiaries acquired from combination of enterprises not under
common control are adjusted based on the fair value of the identifiable net assets on the acquisition date.
All the material account balances, transactions and unrealized profits within the Group shall be offset during preparation of the
consolidated financial statements.
The shareholders' equity and current net gains or losses of the subsidiaries which are not owned by the Company shall be separately
listed under the shareholders' equity and net profit in the consolidated financial statements as minority interest and minority interests.
These current gains or losses of the subsidiaries which are attributable to the minority interest shall be presented as "minority interests"
under the net profit of the consolidated financial statements. If the losses of the subsidiaries attributed to the minority shareholders are
more than the shareholders' equity owned by the minority shareholders in such subsidiaries at the beginning of the period, the minority
interests shall be offset.
If the control of the previous subsidiaries is lost due to disposal of some equity investments or for any other reasons, the remaining
equity shall be re-measured at fair value on the date when control is lost. The difference between the sum of consideration received
from disposal of equity and the fair value of the remaining equity, and the Company's share of the previous subsidiaries' net assets
calculated at the previous shareholding proportion from the acquisition date, shall be recognized in investment income in the period
when control is lost. Other comprehensive income related to the equity investment of the previous subsidiaries shall be conducted on
the same basis as the direct disposal of related assets or liabilities by the acquired parties when the control is lost (Except for the change
caused by the re-measurement of net liabilities or net assets of the defined benefit plan in the previous subsidiary, the remaining part
shall be converted into investment income for current period). Thereafter, such remaining equity shall be subject to subsequent
measurement according to the Accounting Standards for Business Enterprises No. 2 - Long-term Equity Investments or Accounting
Standards for Business Enterprises No. 22 - Confirmation and Measurement of Financial Instruments and other relevant regulations.
For details, please refer to "19. Long-term equity investments" of Note V or "11. Financial instruments" of Note V.
If the Group disposes of the equity investment of the subsidiaries step by step through multiple transactions until it loses the control
thereof, it is necessary to determine whether such transactions fall within "a package deal". The multiple transactions shall be taken as
"package deal" for accounting treatment, if the terms, conditions and economic impacts of the transactions undertaken to dispose the
equity investment of the subsidiaries meet one or more of the following conditions: ① these transactions are entered into at the same
time or with their impacts on each other considered; ② a complete business result may be achieved only when these transactions when
taken as a whole; ③ one transaction depends on at least one of the other transactions; ④ one transaction is not economical on its own,
but it is economical when considered together with other transactions. If they do not fall within "package deal", each of them shall be
subject to accounting treatment according to the principles applicable to ''Partial disposal of the long-term equity investments in the
subsidiaries without losing control'' (for details, please refer to (2) ④ of 19 of Note V) and ''Loss of control of the previous subsidiaries
due to disposal of some equity investments or for any other reasons'', as appropriate. If the transactions taken to dispose of the equity
investment in the subsidiaries until loss of control are recognized as "package deal", these transactions shall be subject to accounting
treatment as one transaction in which the subsidiaries are disposed and the control is lost. However, the difference between the price
for each disposal before the control is lost and share of such subsidiaries' net assets as a result of disposal of investment, shall be
recognized in other comprehensive income in the consolidated financial statements, and be included in profit or loss for the period
when the control is lost.
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8. Classification of joint venture arrangement and accounting treatment methods for joint operation
None
9. Criteria for determining cash and cash equivalents
Cash and cash equivalents of the Group include cash on hand, deposits available at any time for payment, and short-term (generally
due within three months from the date of purchase) and highly liquid investments which are readily convertible into known amounts
of cash and subject to an insignificant risk of changes in value.
10. Foreign currency business and foreign currency statement translation
(1) Conversion method of foreign currency transaction
A foreign currency transaction of the Group is translated into the functional currency at initial recognition, using the spot exchange
rate prevailing at the date of the transaction (it means, in most cases, the central parity of the foreign exchange rate announced by the
People's Bank of China on that day; the same hereinafter). However, a foreign currency exchange transaction or other foreign currency
exchange involved transaction of the Group is translated into the functional currency using the actual exchange rate.
(2) Translation method of monetary items denominated in foreign currencies and non-monetary items denominated in foreign
currencies
The foreign currency monetary items on the balance sheet date are translated at the spot exchange rate on the balance sheet date, and
the exchange differences arising therefrom are included in the current gains and losses, except for the exchange difference of the
principal and interest of foreign currency special loans related to the acquisition and construction of assets eligible for capitalization.
Non-monetary items denominated in foreign currency that are measured at historical cost shall still be valued in the functional currency
and converted at the spot exchange rate as of the transaction date. Non-monetary items denominated in foreign currency that are
measured at fair value are converted by using the exchange rate at the date when fair value is determined and the difference between
the converted functional currency amount and the prior amount in functional currency is recorded as profit or loss arising from a change
in fair value (including exchange rate change) for the current period or other comprehensive income.
(3) Translation method of foreign currency financial statements
The foreign currency financial statements of overseas operations shall be converted into Chinese currency statements in accordance
with the following methods: The assets and liabilities items in the balance sheet are translated at the spot exchange rate on the balance
sheet date; except for "undistributed profits", other items of shareholder's equity are converted at the spot exchange rate at the time of
occurrence. Revenues and expenses in the profit statement are translated using the average exchange rates prevailing in the period of
the transactions. Undistributed profits in the beginning of the year are the undistributed profits at the end of the prior year as translated;
undistributed profits at the end of the period are calculated and presented according to the translated profit distributions; exchange
differences from translation between translated assets and translated liabilities and equities are recognized in other comprehensive
income as exchange differences from translation. When the Group disposes of, and loses the control over, an overseas operation,
exchange differences from translation which are presented in "equity" of the balance sheet and related to the overseas operation are,
all or based on the disposal proportion, transferred to the profit or loss of the period of disposal.
Cash flows denominated in foreign currencies and cash flows of overseas subsidiaries are translated using the average exchange rates
prevailing in the period of the cash flows. Any impact of exchange rate changes on cash is presented as a separate adjusting item in the
cash flow statement.
The amount in the beginning of the year and the actual amount of the prior year are presented as translated amounts based on the prior
year's financial statements.
When all the equities of the Group in an overseas operation are disposed, or the control over an overseas operation is lost for a disposal
of partial equity investments or any other reason, exchange differences which are presented in "shareholder's equity/owner's equity" of
the balance sheet, related to the overseas operation and attributable to the parent company are all transferred to the profit or loss of the
period of disposal.
If the proportion of equities in an overseas operation declines (but the control over that overseas operation is not lost) for a disposal of
partial equity investments or any other reason, exchange differences which are related to that partial disposal are attributed to minority
interest and not transferred to the profit or loss of the period of disposal. When the disposal of overseas operation involves a part of the
equities in an associate or joint venture, exchange differences from translation which are related to the overseas operation are, based
on the disposal proportion, transferred to the profit or loss of the period of disposal.
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For any monetary item denominated in a foreign currency which is substantially net investment in an overseas operation, in the
consolidated financial statements, exchange differences from the exchange rate changes are recognized in other comprehensive income
as "exchange differences from translation", and when the overseas operation is disposed, are transferred to the profit or loss of the
period of disposal.
11. Financial instruments
A financial asset or financial liability shall be recognized when the Group becomes a party to a financial instrument contract.
(1) Classification, recognition and measurement of financial assets
Pursuant to the business model of managing financial assets and the contractual cash flow characteristics of financial assets, financial
assets are classified by the Group into financial assets at amortized cost, financial assets at fair value through other comprehensive
income, and financial assets at fair value through profit and loss.
Financial assets, when initially recognized, shall be measured at fair value. For the financial assets measured at fair value through profit
and loss, the related transaction costs shall be included directly into current gains and losses. For the financial assets or financial
liabilities of other categories, the related transaction costs shall be included in the initially recognized amount. For the accounts
receivable or notes receivable arising from the sale of products or the provision of labor services, which do not include or consider
major financing components, the amount of consideration that the Group is expected to be entitled to is taken as the initially recognized
amount.
① Financial assets measured at amortized cost
The Group's business model for managing financial assets is aimed to collect contractual cash flow, and the contractual cash flow
characteristics of such financial assets are consistent with the basic lending arrangement, i.e., the cash flow generated on a specific date
is only the payment of principal and interest based on the amount of outstanding principal. For such financial assets, the Group shall
perform subsequent measurements at the amortized cost by effective interest method. The gains or losses arising from amortization or
impairment shall be included in current gains and losses.
② Financial assets at fair value through other comprehensive income
The Group's business model for managing this type of financial assets aims both to collect the contractual cash flow and to sell it, and
the characteristics of contractual cash flow of this type of financial assets shall be consistent with the basic lending arrangement. The
Group measures these financial assets at fair value and the changes thereof shall be included in other comprehensive income, but the
impairment losses or gains, exchange gains and losses and interest income calculated by the effective interest method shall be included
in current gains and losses.
Apart from that, the Group shall designate some investments in non-trading equity instruments as financial assets measured at fair
value and the changes thereof shall be included in other comprehensive income. The Group will include the relevant dividend income
of this type of financial assets into current gains and losses, and the changes in fair value into other comprehensive income. Upon the
termination of recognition of financial assets, the accumulated gains or losses previously included in other comprehensive income shall
be transferred out of other comprehensive income and transferred to the undistributed profits, other than being included in current gains
and losses.
③ Financial assets at fair value through profit or loss
The financial assets except those classified into financial assets measured at amortized cost and financial assets at fair value through
other comprehensive income as mentioned above, are classified by the Group into those measured at fair value through profit and loss.
In addition, at initial recognition, part of the financial assets can be recognized by the Group as financial assets measured at fair value
through profit and loss, to eliminate or significantly reduce accounting mismatch. The financial assets are subsequently measured by
the Group at fair value, and changes in fair value are included in current gains and losses.
(2) Classification, recognition and measurement of financial liabilities
At initial recognition, financial liabilities are classified into financial liabilities at fair value through profit and loss, and other financial
liabilities. For the financial liabilities at fair value through profit and loss, the related transaction costs shall be included directly in
current gains and losses. For other financial liabilities, the related transaction costs shall be included in the initially recognized amount.
① Financial liabilities at fair value through profit and loss
The financial liabilities at fair value through profit and loss shall include financial liabilities held for trading (including derivatives
falling into the category of financial liabilities) and financial liabilities designated as those measured at fair value through profit or loss
at initial recognition.
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Financial liabilities held for trading (including derivatives falling into the category of financial liabilities) shall be subsequently
measured at fair value. Except for hedging accounting, changes in fair value shall be included in current gains and losses.
The amount of change in the fair value of a financial liability which is designated as those measured at fair value through profit or loss
due to change in the Group's own credit risks shall be included in other comprehensive income. Upon the termination of recognition
of such liability, the accumulative change in its fair value caused by the change of its own credit risk included in other comprehensive
income is transferred to undistributed profits. The changes in its fair value shall be recorded in current gains and losses. If the treatment
of the impact on the credit risk change of the financial liabilities in the above manner will cause or expand the accounting mismatch in
the profit and loss, the Group will recognize all the gains or losses (including the changes in the Group's own credit risks) of the
financial liabilities into current gains and losses.
② Other financial liabilities
Other financial liabilities except those caused by the transfer of financial assets that do not conform to the conditions for derecognition
or continue to relate to the transferred financial assets and financial guarantee contracts shall be classified as financial liabilities
measured at amortized cost, which shall be subsequently measured at amortized cost, and the gains or losses arising from derecognition
or amortization shall be included in current gains and losses.
(3) Principle of recognition and measurement method of financial asset transfer
The financial asset shall be de-recognized if: ① The contractual right to receive cash flows of the financial asset is terminated; ②The
financial asset has been transferred and almost all risks and rewards in the ownership of the financial asset have been transferred to the
transferee; or ③ The financial asset has been transferred and the enterprise has neither transferred nor retained almost all risks and
rewards in the ownership of the financial asset, but has waived its control over the financial asset.
If the enterprise does not transfer or retain substantially all of the risks and rewards related to the ownership of a financial asset and if
the enterprise does not waive its control over the financial asset, it shall, according to the extent of its continuous involvement in the
transferred financial asset, recognize the relevant financial asset and recognize the relevant liabilities accordingly. The extent of
involvement in the financial asset transferred, refers to the company's exposure to changes in the value of the financial assets.
If the overall transfer of a financial asset meets the conditions for de-recognition, the difference between the book value of the
transferred financial asset and the sum of the transfer consideration received and the change in fair value originally recognized in other
comprehensive income will be recognized in current gains and losses.
If the partial transfer of financial assets meets the conditions for derecognition, the book value of the transferred financial assets is
apportioned between the derecognized part and the non-derecognized part according to their respective relative fair values, and the
difference between the sum of the transfer consideration received and the change in fair value originally recognized in other
comprehensive income and apportioned to the de-recognition component and the aforesaid attributed book value will be recognized in
current gains and losses.
If a financial asset is sold with the right of recourse or an endorsement, the Group needs to determine whether almost all the risks and
rewards related to the ownership of the financial asset have been transferred. If all the risks and rewards related to the ownership of the
financial asset have been transferred to the transferee, the Group shall de-recognize the financial asset; If all the risks and rewards
related to the ownership of the financial asset have been retained, the Group shall not de-recognize the financial asset. If none of the
risks and rewards related to the ownership of the financial asset has been transferred or retained, the Group shall continue to determine
whether it retains the control over the asset, and the accounting standard stated in the aforesaid paragraphs shall apply.
(4) Derecognition of financial liabilities
When the current obligations of a financial liability (or part of it) have been discharged, the financial liability (or that part of the
financial liability) shall be de-recognized by the Group accordingly. When the Group (borrower) signs an agreement with a lender to
replace a financial liability with a new one, in case of substantially different terms of contract between the new one and the original
one, the Group shall derecognize the original one and recognize the new one. If a substantial modification is made to all (or part of)
the original financial liabilities by the Group, the original financial liabilities shall be de-recognized, and at the same time, a new
financial liability shall be recognized in accordance with the modified terms.
If all (or a part of) the financial liability is de-recognized, the difference between the book value allocated to the derecognized part and
the consideration paid (including the transferred non-cash assets or the liabilities assumed) is included in current gains and losses by
the Group.
(5) Offset of financial assets and financial liabilities
When the Group has the legal right to offset the recognized financial assets and financial liabilities, which is enforceable for the time
being, and the Group plans to settle on a netting basis or capitalize financial assets and serve financial liabilities, any net amount from
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netting of financial assets and financial liabilities shall be included in the balance sheet. Otherwise financial assets and financial
liabilities shall be included separately in the balance sheet and shall not offset each other.
(6) Method of determining the fair value of financial assets and financial liabilities
Fair value refers to the price that market participants can receive by selling an asset or need to pay by transferring a liability in the
orderly transactions on the measurement date. The fair value of a financial instrument in an active market is determined by the Group
at the price quoted in the active market. The quotation in an active market refers to the price that is easily acquired from exchanges,
brokers, industry associations, pricing service agencies, and the like on a regular basis and represents the actual market transactions in
fair trade. If there is no financial instrument in an active market, its fair value shall be determined by the Group via valuation techniques.
Valuation techniques include looking into the prices used in recent market transactions by parties who refer to familiar situations and
trade voluntarily and the current fair value of other financial instruments which are essentially the same, as well as using the discounted
cash flow method, the option pricing model and the like. During valuation, the Group shall adopt the valuation techniques applicable
under the current circumstances and supported by sufficient available data and other information, select the input values consistent
with the characteristics of assets or liabilities considered by market participants in the transactions of related assets or liabilities, and
give priority to the relevant observable input values as much as possible. The unobservable input values are used only when the relevant
input values are unavailable or impracticable.
(7) Equity instruments
An equity instrument is a contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The
Group's issuance (including refinancing), repurchase, sales or cancellation of an equity instrument shall be accounted for as a change
to equity. Transaction costs of an equity transaction are accounted for as a deduction from equity. The Group does not recognize
changes in the fair value of equity instruments.
If the Group's equity instruments distribute dividends (covering "interest" incurred by instruments classified as equity instruments)
during the existence thereof, the dividends shall be treated as profit distribution.
12. Impairment of financial assets
The financial assets for which the Group needs to recognize the impairment losses are financial assets measured at amortized cost,
which mainly include notes receivable, accounts receivable, other receivables, contract assets, and so on.
(1) Method for recognizing provision for impairment
Based on the expected credit loss, the Group shall make provision for impairment of the aforementioned items by its applicable
measurement method (general method or simplified method) of expected credit loss and recognize the credit impairment losses.
Credit loss means the difference between all contractual cash flows receivable by the Group in accordance with the contract and all
cash flows expected to be received, discounted at the original actual interest rate, i.e., the present value of all cash shortages. Purchased
or originated credit-impaired financial assets shall be discounted by the Group according to credit-adjusted effective interest rate
adjusted by credit of such financial assets.
According to the general methods to measure expected credit losses, the Group evaluates whether the credit risk of the financial assets
(including other applicable items; the same hereinafter) has increased significantly since the initial recognition at each balance sheet
date. If the credit risk of the financial instrument has increased significantly since the initial recognition, the Group measures its loss
allowance according to the amount equivalent to the expected credit loss of the financial instrument over its expected lifetime; if the
credit risk has not increased significantly since initial recognition, the Group measures its loss allowance according to the amount
equivalent to the expected credit loss of the financial instrument in the next 12 months. When assessing expected credit loss, the Group
gives consideration to all reasonable and well-founded information, including forward-looking information.
For financial instruments with relatively low credit risks on the balance sheet date, the Group assumes that their credit risks have not
increased significantly since initial recognition, and measures loss allowance based on the expected credit loss within the next 12
months.
(2) Criteria for judging whether the credit risks have increased significantly since initial recognition
When the default probability of a financial asset within the expected duration determined on the balance sheet date is significantly
higher than that in initial recognition, it suggests that the credit risks of the financial asset have significantly increased. Except under
special circumstances, the Group determines whether credit risks have increased significantly since initial recognition by estimating
the changes in lifetime risk of default occurring based on the changes in 12-month risk of default occurring as a reasonable.
(3) Grouping method for assessing the expected credit risks
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The Group carries out separate credit risk evaluation for financial assets with significantly different credit risks, including receivables
in dispute with the other party or involving litigation or arbitration; accounts receivable where there are obvious signs that the debtor
may not be able to fulfill the repayment obligation, etc.
Except for the financial assets that are individually assessed for credit risks, the Group shall classify the financial assets into different
groups in view of the common risk characteristics, and assess the credit risks on the basis of groups.
(4) Accounting treatment methods for impairment of financial assets
At the end of a period, the Group shall calculate the expected credit loss of all types of financial assets. If the expected credit loss is
greater than the book value of its current provision for impairment, the difference shall be recognized as impairment loss; if it is less
than the book value of current provision for impairment, the difference shall be recognized as impairment gain.
(5) Determination method for measurement of expected credit losses of various financial assets
①Notes receivable
For note receivable, the Group measures loss allowance according to the amount equivalent to the expected credit loss over the lifetime.
Depending on their credit risk characteristics, notes receivable are classified into different groups:
Item Basis for determining groups
Bank acceptance notes The acceptor is a bank with low credit risk
Commercial acceptance notes By acceptor's credit risk (the same as that of accounts receivable)
②Accounts receivable
For accounts receivable not containing significant financing components, the Group measures loss allowance according to the amount
equivalent to the expected credit loss over the lifetime.
Except for accounts receivable for which credit risk is assessed separately, depending on their credit risk characteristics, accounts
receivable is classified into different groups:
Item Basis for determining groups
Except for the receivables for which the loss allowance of impairment has been calculated
separately, the Group shall determine, through present situation analysis, the proportion of
Accounts receivable aging group
allowance for bad debt based on the expected credit loss rate of identical or similar
receivables in previous years with similar credit risk characteristics classified by aging
The parent and subsidiary companies included in the consolidated financial statements are
Related party group
divided into groups according to equity relationship.
③Other receivables and factoring receivables
The Group measures impairment losses based on whether the credit risk of other receivables and factoring receivables has increased
significantly since initial recognition, using an amount equivalent to expected credit loss within the next 12 months or entire duration.
④Financing receivables
Financing receivables are primarily classified as notes receivable and accounts receivable which are measured at fair value through
other comprehensive income and are presented under "financing receivables" if they have original maturity of up to one year (including
one year) or under other debt investments if they have original maturity more than one year as from the initial recognition date.
Based on their credit risk characteristics, financing receivables are classified into different groups:
Item Basis for determining groups
Bank acceptance notes The acceptor is a bank with low credit risk
Commercial acceptance notes Classified by the acceptor's credit risk, the same as that of the "Accounts receivable" group
Accounts receivable Same as that of the "Accounts Receivable" group
13. Notes receivable
For further details, please see this Note V. 11. "Financial Instruments" and 12. "Impairment of Financial Assets".
14. Accounts receivable
For further details, please see this Note V. 11. "Financial Instruments" and 12. "Impairment of Financial Assets".
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15. Financing receivables
For further details, please see this Note V. 11. "Financial Instruments" and 12. "Impairment of Financial Assets".
16. Other receivables
For further details, please see this Note V. 11. "Financial Instruments" and 12. "Impairment of Financial Assets".
17. Contract assets
The Group records the right where the client has not paid the contract consideration but the Group has performed its contract obligation
and the Group is not prevented from being unconditionally paid by the client (depending on the lapse of time only) as contract assets
in the balance sheet. Contract assets and contract liabilities under the same contract are listed on a net basis. Contract assets and contract
liabilities under different contracts will not be offset.
For methods of determining and accounting for expected credit losses on contract assets, please see the Note V.12. "Impairment of
Financial Assets".
18. Inventories
(1) Classification of inventory
Inventory types include among others raw materials, goods in stock, revolving materials and products in progress.
(2) Valuation methods of inventory acquired and sold
When inventory is acquired, it is measured based on actual cost, including purchase cost, processing cost and other costs. When
inventory is acquired and sold, it is priced according to the monthly weighted average method.
(3) Basis for determining net realisable values of inventories and method for making provision for decline in the value of inventories
Net realizable value means the estimated selling price of inventory less the estimated cost to be incurred by the time of completion, the
estimated selling expense and related taxes. In determining the net realizable value of inventory, based on obtained evidence, the Group
considers the purpose of the inventory and the impact of any matters occurring after the balance sheet date.
On the balance sheet date, inventory is measured at cost or net realizable value (whichever is lower). If the net realizable value is lower
than its cost, the Group will make provision for inventory depreciation. The provision for decline in the value of inventories is generally
made at the difference between an inventory item's cost and its net realizable value. For the inventory with a large quantity and relatively
low unit price, the provision for decline in the value of inventories is accrued based on the inventory category; for inventories associated
with product series manufactured and sold in the same area, with the same or similar end use or purpose, and are difficult to be measured
separately from other items, the provision for decline in the value of inventories are aggregated. For raw materials with a large quantity
and low unit price, the provision of inventory depreciation is generally made according to the time the inventory has been kept.
After the provision of inventory depreciation is made, if the original trigger for inventory write-down has disappeared so that the net
realizable value of the inventory is higher than the book value, the amount of provision of inventory depreciation shall be reversed, and
the reversed amount shall be recognized in current gains and losses.
(4) The existing stock inventory system is a perpetual inventory system.
(5) Amortization method of revolving materials
The Group's revolving materials include low-value consumables and packaging materials. Large revolving materials are amortized at
the time of receipt over months of the expected useful life. Other low-value consumables are amortized at the time of receipt using the
one-off amortization method. Packaging materials are amortized at the time of receipt using the one-off amortization method.
19. Long-term equity investments
Long-term equity investments in this part refer to the long-term equity investments through which the Group has control, joint control
or significant influence over investee. The long-term equity investments through which the Group does not have control, joint control
or significant influence over investee, is taken as a financial asset at fair value recorded in current gains and losses. If it is non-trading,
the Group can choose to designate it as a financial asset at fair value recorded in other comprehensive income at initial recognition.
For details about the relevant accounting policy, please see this Note V. 11. "Financial Instrument".
Joint control refers to the Group's common control of an arrangement in accordance with relevant agreement, and the relevant activities
of the arrangement must be unanimously agreed by the participants sharing the control before a decision can be made. Significant
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influence refers to the Group's right to participate in the decision-making of an invested entity's financial and operational policies, but
not to control or jointly control the formulation of these policies with other parties.
(1) Determination of investment cost
For long-term equity investments arising from business combination under the same control, the proportion of the book value of the
stakeholders' equity of the merged party in the consolidated financial statements of the final controlling party is regarded as the initial
investment cost of long-term equity investments on the combination date. If there is a difference between the initial investment cost of
long-term equity investments and the cash paid, non-cash assets transferred, and book value of liabilities assumed, the capital surplus
shall be adjusted. Where the capital surplus is insufficient to absorb the difference, undistributed profits shall be adjusted. The
investments cost which adopts the equity securities issued as the consideration should be adopted as the initial investments cost of the
long-term equity investments according to the proportion of the book value of the stakeholders' equity of the merged party in the
consolidated financial statements of the final controlling party, and adjust the capital surplus by the difference between the initial
investments cost of long-term equity investments and the amount of issued stock's face value (regarded as share capital). If the capital
surplus is insufficient to absorb the difference, undistributed profits should be adjusted. If the equity of the acquiree under the same
control is acquired step by step through multiple transactions leading to a merger of enterprises under the same control, the transactions
shall be confirmed whether they belong to a "package transaction": If they belong to a "package transaction", all transactions shall be
treated as one transaction over which the acquiree has control. If it is not a "package transaction", the Group regards the initial cost of
the long-term equity investments as the proportion of the shareholders' equity of the acquired enterprise to the carrying amount in the
consolidated financial statements of the final controller at the date of combination. If there is a difference between the initial investments
cost of long-term equity investments on the date of combination and the sum of the book value of the long-term equity investments
before the merger plus the book value of the new share payment consideration on the date of combination, the capital surplus shall be
adjusted. Where the capital surplus is insufficient to absorb the difference, undistributed profits shall be adjusted. If the equity
investment held before the combination date is measured using the equity method or recorded as a financial asset at fair value in other
comprehensive income. The other comprehensive income recognized as a result will not be accounted temporarily.
For the acquisition of long-term equity investments involving enterprises under common control, the Group regards the initial cost of
the long-term equity investments at that date as business combination cost, including the sum of fair values of assets paid, liabilities
incurred or borne, and equity securities issued, by the buyer. If the equity of the acquiree is acquired step by step through multiple
transactions leading to a merger of enterprises under different control, the transactions shall be confirmed whether they belong to a
"package transaction": If they belong to a "package transaction", all transactions shall be treated as one transaction over which the
acquiree has control. If it is not a "package transaction", the sum of the book value of the original equity investments plus the new
investments cost is regarded as the initial investments cost of long-term equity investments calculated by the cost method. If the
previous equity is measured using the equity method, the relevant other comprehensive income will not be accounted temporarily.
Acquisition-related costs including auditing fees, legal services fees, valuation advice fees and other relevant management fees are
generally recognized in profit or loss as incurred.
A long-term equity investments acquired other than through a business combination is initially measured at the cost, and such cost is
determined at the amount of cash paid by the Group, the fair value of the equity securities issued by the Group, the value agreed in an
investment contract or agreement, the fair value or book value of asset exchanged in the non-monetary asset exchange, or the fair value
of the long-term equity investments. Costs, taxes and other necessary expenses directly related to the acquisition of the long-term equity
investments are also included in the investment cost. If additional investments addition has a significant influence over investee, or
jointly control other than the control over investee, the cost of long-term equity investments shall be the sum of the fair value of the
original equity investments determined according to Accounting Standards for Business Enterprises No. 22 - Recognition and
Measurement of Financial Instruments and the cost of the additional investment.
(2) Method of subsequent measurement and recognition of gains and losses
The long-term equity investments through which the Group has joint control (except for joint operation) or significant influence over
investee shall be calculated by the equity method. The Group's financial statements use the cost method to calculate long-term equity
investments that constitutes control over invested entities.
① Long-term equity investments calculated by cost method
Under the cost method, a long-term equity investment is measured at initial investments cost. Increasing or reducing investments will
adjust the cost of long-term equity investments accordingly. Except for actual price paid when the investment is obtained or the cash
dividends or profits that are included in the consideration that has been declared but not yet disbursed, the current investment income
shall be recognized according to the cash dividends or profits declared by the invested entity.
② Long-term equity investments accounted by equity method
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When the initial investments cost of long-term equity investments accounted under equity method is greater than the investments, the
difference in the fair value share of the identifiable net assets of the invested entity is enjoyed, without adjusting the initial investments
cost of long-term equity investments; when the initial investments cost is less than the investments, the difference in the fair value
share of the identifiable net assets of the invested entity is included in the current gains and losses, and the cost of long-term equity
investments shall be adjusted accordingly.
When the equity method is adopted, according to the share of the net profit and loss and other comprehensive income realized by the
invested entity, the investment income and other comprehensive income shall be recognized respectively, and the book value of the
long-term equity investments shall be adjusted; the book value of the long-term equity investments is reduced correspondingly in
accordance with the portion of the profits or cash dividends declared and distributed by the invested entity; for changes in owner's
equity other than net profit and loss, other comprehensive income and profit distribution of the invested entity, the book value of long-
term equity investments shall be adjusted and included in capital surplus. The share of net profit and loss of the invested entity shall be
recognized, based on the fair value of various identifiable assets of the invested entity when the investment is made, after adjustment
of the net profit of the invested entity. When the accounting policy and accounting period adopted by the invested entity are inconsistent
with those of the Group, the investment income and other comprehensive income shall be recognized based on the adjusted financial
statements of the invested entity in accordance with the Group's accounting policies and accounting period. For the Group's transactions
with its associates and joint ventures, if the invested or sold asset does not constitute a business, unrealized gains or losses resulting
from the transactions are recognized as investment income or loss to the extent that those attributable to the Group's equity interest are
eliminated. However, unrealized losses resulting from the Group's transactions with its invested entity in respect of impairment losses
on the transferred assets should not be eliminated. If the asset invested by the Group to its associates and joint ventures constitutes a
business, to the extent that the investor realizes long-term equity investments other than control, the fair value of the invested business
shall be the initial investments cost of the additional long-term equity investments, and the difference between the initial investments
cost and the book value of the invested business shall be recorded in the profit or loss of the current period. If the asset sold by the
Group to its associates and joint ventures constitutes a business, the difference between the consideration received and the book value
of the invested business shall be recorded in the profit or loss of the current period. If the asset purchased by the Group from its
associates or joint ventures constitutes a business, the accounting shall be made pursuant to the Accounting Standards for Business
Enterprises No. 20 - Business Combination shall apply, the gain or loss from the transaction shall be fully recognized.
The Group de-recognizes its share of net losses of the invested entity after the carrying amount of the long-term equity investments
together with any long-term interests that substantially constitute part of its net investments in the invested entity shall be written down
to zero. In addition, if the Group has the obligation to bear additional losses to the invested entity, the provisions shall be recognized
according to the expected obligations and be recorded in the investment losses of the current period. Where net profits are subsequently
made by the invested entity, the Group resumes recognizing its share of those profits only after its share of the profits exceeds the share
of losses previously not recognized.
③ Acquisition of minority interest
When preparing consolidated financial statements, if there is a difference between the new long-term equity investments acquired as a
result of the purchase of minority shares and the share of net assets continuously calculated from the date of purchase (or merger) of
the subsidiary based on the new shareholding ratio, the capital surplus shall be adjusted. Where capital surplus is insufficient to offset
the difference, the undistributed profits are adjusted.
④ Long-term equity investments disposal
In consolidated financial statements, where a parent company partially disposes of a long-term equity investment in a subsidiary without
losing the control over it, the difference between the disposing price and the net assets of the subsidiary obtained from the disposal of
the long-term equity investments shall be recognized in the shareholder's equity. If it's partial disposal by a parent company of a long-
term equity investment in a subsidiary and the control over the subsidiary is lost, the accounting policy stipulated in this Note V. 7. (2)
"Method for Preparing the Consolidated Financial Statements" shall apply.
For disposal of long-term equity investments in other situations, the difference between the disposed equity's book value and the actual
proceeds is included in the current gains and losses.
When the Group reduces its ownership interest in investee but continues to use the equity method for long-term equity investments,
other comprehensive income previously recorded as shareholders' equity is disposed in proportion, subject to the accounting treatment
applicable to the assets or liabilities related to direct disposal of the invested entity. The equity recognized by the Group, other than the
change of the net profits and loss, other comprehensive income and profit distribution of the invested entity, is transferred to current
gains and losses in proportion.
When the Group reduces its ownership interest but the Group continues to use the cost method for long-term equity investments, for
the other comprehensive income recognized by the Group using equity method prior to the control over the investee or under financial
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instrument recognition and measurement standard, other comprehensive income previously recorded as shareholders' equity is subject
to the accounting treatment applicable to the assets or liabilities related to direct disposal of the invested entity and is transferred to
current gains and losses in proportion. Then the other changes in shareholders' equity recognized by the Group using equity method,
not arising from the change of the net profits and loss, other comprehensive income or profit distribution of the invested entity, are
reclassified to profit and loss in proportion.
If the Group loses its control over the invested entity due to the disposal of a portion of an equity investment, the equity method is
adopted in the preparation of individual financial statements when the remaining equity allows the Group to exercise joint control or
hold significant influence on the invested entity, and the remaining equity after disposal is regarded as being adjusted by the equity
method at the time of acquisition; if the remaining equity after disposal does not allow the Group to exercise joint control or hold
significant influence on the invested entity, it is calculated in accordance with the relevant provisions of financial instrument recognition
and measurement standards, and the difference between the fair value and the book value on the day when the control is lost is recorded
in current gains and losses. If other comprehensive income recognized, using the equity method or under the standards for recognition
and measurement of financial instruments before the Group obtains the control over the invested entity, is subject to the accounting
treatment applicable to the assets or liabilities related to direct disposal of the invested entity when the control over the invested entity
is lost, changes in the shareholders' equity of the net assets of the invested entity recognized using the equity method, except for net
gains and losses, other comprehensive income and profit distributions, shall be transferred to current gains and losses when the control
over the invested entity is lost. Other comprehensive income and other shareholders' equity are transferred in proportion when the
remaining equity after disposal is calculated by the equity method. If the remaining equity after disposal is calculated in accordance
with the standards for recognition and measurement of financial instruments, other comprehensive income and other shareholders'
equity are transferred in full.
If joint control or significant influence on the invested entity is lost by the Group due to the disposal of some equity investments, the
remaining equity after disposal is calculated according to the financial instrument recognition and measurement standards. The
difference between the fair value and the book value on the day when joint control or significant influence is lost is recorded in current
gains and losses. Other comprehensive income of the equity investment previously recognized using the equity method is subject to
the accounting treatment applicable to the assets or liabilities related to direct disposal of the invested entity when the Group stops
using the equity method. Shareholders' equity recognized by the Group, other than the change of the net profits and loss, other
comprehensive income and profit distribution of the invested entity, is reclassified to profit and losses fully when the Group stops using
the equity method.
The equity investments in the subsidiary is disposed of step by step by the Group through multiple transactions until the control is lost.
The aforementioned transactions, if belong to package transactions, are disposed as one transaction for disposal of the equity
investments of the subsidiary and loss of control. The difference between the price of each disposal before the control is lost and the
book value of long-term equity investments related to the disposed equity are recorded in other comprehensive income, and then
transferred to the profit or loss of the current period when the control is lost.
20. Investment properties
Measurement of investment properties
Measurement by cost method
Depreciation or amortization method
Investment properties mean the properties held for the purpose of rent earning or capital appreciation, or both. It includes the land use
rights that have been leased, the land use rights that are held for transfer upon appreciation, and the leased buildings. In addition, the
vacant buildings held by the Group for the purpose of leases will also be reported as investment properties, if the board of directors (or
similar authority) makes a resolution in written form that expressly indicates that the buildings will be used for leases and the intention
of holding will not change in the short term.
Investment properties are initially measured at cost. Subsequent expenses related to investment properties shall, if economic profits
related to the property are likely to be gained and its costs can be measured reliably, be recorded as the cost of investment properties.
Other subsequent expenditures are recorded in the current gains and losses when incurred.
The Group adopts the cost model for subsequent measurement of investment properties. The investment properties are depreciated or
amortized in accordance with policies consistent with building or land use rights.
When self-use properties or inventories are converted to investment properties, or investment properties are converted to self-use
properties, the value after the conversion shall be recognized at the book value before the conversion.
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When investment properties are disposed or permanently withdrawn from use and is not expected to obtain economic benefits from its
disposal, the investment properties shall be de-recognized. The disposal income from the sale, transfer, abandonment or destruction of
investment properties less its book value and relevant taxes shall be recognized in current losses and profits.
21. Fixed assets
(1) Recognition criteria
Fixed assets mean the tangible assets held with an estimated useful life exceeding one fiscal year for the production of goods, provision
of labor services, leasing or management. Fixed assets may be recognized when they meet the following conditions: Economic benefits
relating to the fixed asset are likely to be gained by the Group, and the cost of the fixed asset can be measured reliably. Fixed assets
are initially measured at cost, with the influence of estimated abandonment cost taken into account.
(2) Depreciation methods
Annual depreciation
Category Depreciation methods Estimated useful life Residual value rate
rate
Buildings Straight-line method 20-30 years 5%-10% 3%-4.75%
Production equipment Straight-line method 5-10 years 5%-10% 9%-19%
Measuring equipment Straight-line method 5-10 years 5%-10% 9%-19%
Office equipment Straight-line method 5 years 5%-10% 18%-19%
Transportation equipment Straight-line method 5 years 5%-10% 18%-19%
Fixed assets are depreciated over their estimated useful lives using the straight-line method from the month following that in which
they reach their intended usable condition.
The estimated net residual value is the amount that the Group would currently obtain from the disposal of a fixed asset, net of estimated
disposal costs, assuming that the fixed asset has completed its estimated useful life and is in the condition expected at the end of its
useful life.
(3) Explanation of other matters:
Subsequent expenditures relating to fixed assets are included in the cost of fixed assets and the carrying amount of the replaced part is
derecognized if it is probable that the economic benefits associated with the fixed asset will flow and its cost can be measured reliably.
Other subsequent expenditures, except for these, are recognized in profit or loss when incurred.
Fixed assets are derecognized when they are in a disposal condition or when no economic benefits are expected to arise from their use
or disposal. The difference between the disposal proceeds from the sale, transfer, retirement or destruction of fixed assets, net of their
carrying amount and related taxes, is recognized in profit or loss for the current period.
The Group reviews the useful life, estimated net residual value and depreciation method of fixed assets at least at the end of the year
and treats any changes as changes in accounting estimates.
22. Construction in progress
Construction in progress is measured at actual cost, including various construction expenditures incurred during the period of
construction, capitalized borrowing costs and other related expenses before the project reaches the predetermined conditions for use.
Fixed assets under construction are transferred to fixed assets at their estimated value from the date they are ready for the intended use.
This is done in accordance with the project budget, costs, or actual project expenses. This applies when the project has reached its
intended condition of use but the final accounts have not yet been finalized. Equipment scheduled for installation is transferred to fixed
assets upon reaching the intended condition of use, while equipment requiring installation and commissioning is transferred to fixed
assets after reaching the intended condition of use.
Criteria and timing for specific transfer of each category of the Company's construction in progress to fixed assets:
Category Criteria and timing for the transfer to fixed assets
Buildings (1) The main construction works and ancillary works have been substantially completed;
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Category Criteria and timing for the transfer to fixed assets
(2) The construction projects have met the predetermined design requirements and have been accepted by
units responsible for investigation, design, construction, and supervision;
(3) The works have been accepted by external departments including fire-fighting and planning
departments;
(4) Construction works that have reached the intended condition of use but have not yet been finalized are
transferred to fixed assets at their estimated value based on the actual cost of the works from the date of
reaching the intended condition of use.
Machines and (1) The relevant equipment and other supporting facilities have been installed;
equipment that (2) The equipment can maintain normal and stable operation for a period of time after commissioning;
require installation (3) The production equipment can produce qualified products stably for a period of time;
and commissioning (4) The equipment has been accepted by asset managers and users.
23. Borrowing costs
Borrowing costs include interest on borrowing, amortization of discount or premium, auxiliary expenses and exchange differences due
to foreign currency borrowing, etc. Borrowing costs that can be directly attributable to the acquisition, construction or production of
assets eligible for capitalization shall be capitalized when the asset expenditure has been incurred, the borrowing cost has been incurred,
and the acquisition, construction or production necessary to make the asset reach the predetermined conditions for use or sale has
started, and the capitalization shall discontinue when the constructed or produced assets eligible for capitalization reach the
predetermined conditions for use or sale. The remaining borrowing costs are recognized as costs at the time of occurrence.
The amount to be capitalized is the actual interest expense incurred on the specific borrowings less any bank interest earned from
unused funds of the designated borrowings or any investment income arising from the temporary investment of those funds. The amount
to be capitalized on the general borrowings is calculated by applying a capitalization rate to the weighted average of the excess amounts
of cumulative expenditures on the asset over and above the amounts of the specific borrowings. Capitalization rate is calculated and
determined based on the weighted average interest rate of general borrowings.
During the period of capitalization, exchange differences arising from special borrowings in a foreign currency shall be fully capitalized,
and exchange differences arising from general borrowings in a foreign currency shall be recognized in gains and losses.
Assets eligible for capitalization refer to fixed assets, investment properties, inventories and other assets that need to go through quite
a long time of acquisition or production activities to reach the predetermined usable or salable state.
If an abnormal interruption of assets eligible for capitalization occurs in the process of acquisition, construction or production and
continues over 3 months, the capitalization of borrowing costs shall cease and shall not restart until the acquisition, construction or
production of such assets resume.
24. Right-of-use assets
See Note 36. "Lease"for details
25. Intangible assets
(1) Estimated useful life and its determination basis, estimation, amortization method or review procedures
Intangible assets mean the identifiable non-monetary assets owned or controlled by the Group without physical substance.
The intangible assets shall be initially measured at cost. Expenses related to the intangible assets are recognized in the cost of intangible
assets when it is likely that the associated economic benefits will be gained by the Group and the associated costs can be measured
reliably. Other expenses related to the intangible assets are recognized in profit or loss for the period in which it is incurred.
The acquired land use right is generally recognized as intangible assets. Expenses related to land use right and construction cost from
buildings such as self-built factory, etc. are recognized as intangible assets and fixed assets, respectively. In the case of purchased
buildings, related costs are shared between the cost of land use rights and the cost of buildings. The related costs that cannot be allocated
reasonably are recognized as fixed assets.
When intangible assets with a finite useful life are available for use, their original cost is amortized over their estimated useful life
using the straight-line method. Intangible assets with uncertain useful life shall not be amortized.
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The amortization method for intangible assets with finite useful life is as follows:
Item Estimated useful life Amortization method Basis for determination
Land-use right 37-50 years Straight-line method Property rights registration period
Non-patent technology 2-10 years Straight-line method Expected years of economic benefits
Patent right 7-10 years Straight-line method Expected years of economic benefits
Trade mark 5 years Straight-line method Expected years of economic benefits
Software 3-10 years Straight-line method Expected years of economic benefits
For intangible assets with a finite useful life, the Group reviews their useful life and amortization method at the end of the period, and
accounts for any change as a change in an accounting estimate. For intangible assets with uncertain useful life, the Group reviews their
useful life. If it is evident that the duration of associated economic benefits is predictable, the useful life is estimated and the asset is
amortized pursuant to amortization policies for intangible assets with finite useful life.
(2) Scope and accounting treatment of R&D expenditures
The Group classifies various expenses directly related to conducting R&D activities as R&D expenditures, including employees'
remuneration, direct investments, depreciation expenses, depreciation expenses of right-of-use assets, equipment commissioning and
testing expenses, external R&D services, and amortization of intangible assets.
The expenditure for research and development projects in the Group is divided into research phase expenditure and development phase
expenditure.
The classification into the expenditure in the research phase or the expenditure in the development phase in relation to internal R&D
projects of the Group conforms to the following standards:
Expenditures in the research phase are defined as those spent in an innovative, explorative and planned investigation to acquire and
understand new scientific or technical knowledge. The research is the preparation in documents and other aspects for further
development. It is very uncertain whether the completed research will move onto the development phase and whether the development
will lead to the emergence of an intangible asset. Therefore, the Group includes the expenditures in the research phase in expenses and
recognize them in the profit or loss of the current period.
Expenditures in the development phase refer to the expenditures incurred during the stage of applying research results or other
knowledge to a project or design to produce new or substantially improved materials, devices and products before commercial mass
production or use. As the development phase comes after the research phase, the majority of basic conditions for a new product or
technology have been established. Thus, the Group recognizes the expenditures in development phase eligible for capitalization as
intangible assets. Gross expenditures incurred in the period from the point when the conditions for capitalization are satisfied to the
point when intangible assets are ready for the intended purpose are capitalized. No adjustment will be made further for any expenditure
that has been included in expense and recognized in profit or loss before the same intangible assets have met the conditions for
capitalization in the development phase.
Expenditures in the research phase are included in the current gains and losses when incurred.
Expenditures in the development phase are recognized as intangible assets only when the following conditions are all satisfied, or are
included in the profit or loss of the current period:
① Having completed the intangible assets, enabling them to be technically feasible for use or sale;
② Having the intention to complete the intangible assets and use or sell them;
③ The ways in which intangible assets generate economic benefits, including the proof that there is a market for the product produced
using the intangible assets or for the intangible assets. Where the intangible assets are used internally, their usefulness shall be proved;
④ Having sufficient technical, financial and other resources to complete the development of the intangible assets, and having the
ability to use or sell the intangible asset;
⑤ Expenditures attributable to the development phase of the intangible assets can be measured reliably.
If it is impossible to distinguish between expenditures in the research phase and expenditures in the development phase, the R&D
expenditures incurred shall be included in the profit or loss of the current period.
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26. Impairment of long-term assets
For non-current and non-financial assets including fixed assets, construction in progress, intangible assets with finite useful life,
investment properties measured at cost, and long-term equity investments in subsidiaries, associates and joint ventures, the Group
assesses whether there is an indication of impairment at the date of balance sheet. If there is such an indication, the Group estimates
the recoverable amount and carries out an impairment test. An impairment test shall be conducted every year for intangible assets with
uncertain goodwill and useful life and those have not yet reached the usable state, regardless of whether there are signs of impairment.
If the impairment test results show that the recoverable amount of an asset is lower than its book value, the provision for impairment
is accrued according to the difference and is recorded in the impairment loss. The recoverable amount is the higher of the net amount
of the fair value of the asset less the disposal expenses and the present value of the expected future cash flow of the asset. The fair
value of an asset is measured as the price agreed in a sales contract concluded in good faith. In absence of any such sales contract, if
there is an active market for the asset, the best information available is used as a basis to estimate the fair value of the asset. Disposal
expenses include legal fees, taxes and transportation fees related to the disposal of an asset, and direct expenses incurred to make the
asset salable. The present value of expected future cash flows of an asset is measured by applying an appropriate discount rate to the
expected future cash flows generated during the continuous use of the asset at the time of final disposal. The asset impairment provision
is calculated and recognized on the basis of individual assets. In the case of difficulty in estimating the recoverable amount of an
individual asset, the recoverable amount of the asset group to which the individual asset belong is calculated. An asset group is the
smallest unit of combined assets that can generate cash inflows independently.
For goodwill listed separately in the financial statements, the carrying amount of such goodwill arising from business combinations is
allocated to relevant asset groups or asset groups. If the test results show that the recoverable amount of asset groups or combination
of asset groups containing allocated goodwill is lower than its book value, the corresponding impairment loss shall be recognized. The
amount of impairment loss shall firstly be deducted from the carrying amount of goodwill embodied in the asset groups or combination
of asset groups, then be deducted from the carrying amounts of other assets based on the proportions of their carrying amounts in the
asset groups or combination of asset groups.
The impairment losses of assets will not be reversed in subsequent periods once recognized.
27. Long-term prepaid expenses
Long-term prepaid expenses refer to expenses that have already incurred but should be borne by the current and future instalments for
a period of more than one year. Long-term prepaid expenses shall be amortized according to the straight-line method within the
estimated period of benefit.
28. Contract liabilities
Contract liabilities are defined as the Group's obligation to transfer goods to a client for received or receivable consideration from the
client. The Group presents as contract liabilities, at the earlier time point of actual payment by a client or the payment due, if the Group
has paid the contract consideration or the Group has acquired the right to collect unconditionally before the goods are transferred by
the Group to the client. Contract assets and contract liabilities under the same contract are listed on a net basis. Contract assets and
contract liabilities under different contracts will not be offset.
29. Employee benefits
(1) Accounting treatment of short-term benefits
The Group's employee benefits consists mainly of short-term employee benefits, post-employment benefits, termination benefits and
other long-term employee benefits. Including:
Short-term employee benefits include employee wages or salaries, bonuses, allowances and subsidies, employee welfare fees, medical
insurance contributions, maternity insurance contributions and work injury insurance contributions, housing provident fund
contributions, union running costs and employee education costs, and non-monetary benefits. During the accounting period when the
employees provide services for the Group, the short-term remuneration actually incurred is recognized as a liability and recorded in
the current gains and losses or related asset costs. The non-monetary welfare in short-term remuneration should be measured at fair
value.
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(2) Accounting treatment of post-employment benefits
Post-employment benefit mainly covers basic pension insurance and unemployment insurance. Most of post-employment benefit plans
are mainly defined benefit plans. The defined benefit plans of the Group are basic pension insurance and unemployment insurance, and
the contributions thereto are recorded in the asset cost or the profit or loss of the current period when they occur.
(3) Accounting treatment of termination benefits
Where the Group terminates the labor relationship with an employee before the labor contract expires, or offers proposed compensation
for encouraging the employee to accept the redundancies voluntarily, if the Group cannot unilaterally withdraw the termination benefits
provided by the termination of labor relations plan or reduction proposal, and the Group recognizes the costs related to the
reorganization involving the payment of the termination benefits (whichever comes first), the employee benefits liabilities arising from
the termination benefits are recognized and recorded in the current gains and losses. However, termination benefits which are expected
not to be fully paid within twelve months after the end of the annual reporting period are accounted for as other long-term employee
benefits.
Internal employee retirement programs are accounted for, using the above method applicable to termination benefits. The Group
recognizes in the profit or loss of the current period (termination benefits) employee salaries and contributions to the employee's social
insurance covered by its internal retirement program from the day when the employees stop their services until their statutory retirement
dates, when the conditions for provisions are satisfied.
(4) Accounting treatment of other long-term employee benefits
If other long-term employee benefit provided by the Group for its employees constitutes the defined contribution plan, the accounting
treatment for the defined contribution plan applies. In any other circumstance, the accounting treatment for the defined benefit plan
applies.
30. Provisions
Obligation relating to a contingent are recognized as provisions when they meet the following conditions: (1) the Group has a present
obligation related to a contingency; (2) it is probable that an outflow of economic benefits will be required to settle the obligation; and
(3) the amount of the obligation can be measured reliably.
Provisions are measured against the best estimate of the consideration required to settle the present obligation at the balance sheet date,
taking into account factors pertaining to a contingency such as the risks, uncertainties and time value of money.
If all or part of the expenses required to settle the provisions are expected to be compensated by a third party, the amount of
compensation is recognized separately as an asset when it is basically recognized that it can be received, and the recognized
compensation amount doesn't exceed the book value of the provision.
31. Share-based payment
(1) Accounting treatment of share-based payment
Share-based payment is a transaction where equity instruments are granted or equity instrument-based liabilities are assumed for the
consideration of the services provided by employees or other parties. Share-based payment is classified into equity-settled share-based
payment and cash-settled share-based payment.
① Equity-settled share-based payment
Equity-settled share-based payments made for the consideration of the services provided by the employees, is measured at the fair
value of equity instruments on the date of grant to the employees. In the case that the right can be exercised after the completion of
services in the vesting period or satisfaction of stipulated performance conditions, the fair value amount shall, on the basis of the best
estimate of the quantity of equity instruments with vesting in the vesting period, be recorded in relevant cost or expense using the
straight-line method. In the case that the right can be exercised immediately after the grant, it is recorded in relevant cost or expense
on the grant date, and the capital surplus is increased accordingly.
On each balance sheet date during the vesting period, the Group makes the best estimate based on the latest available follow-up
information such as changes in the number of employees with vested rights, and revises the estimated number of equity instruments
with vesting. The impact of the above estimation is recorded in the cost or expense of the current period, and the capital surplus adjusted
accordingly.
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Equity-settled share-based payments made for the consideration of the services provided by other parties shall, if the fair value of the
services can be measured reliably, is measured at fair value at the date of grant, and if the fair value of the services cannot be measured
reliably but the fair value of the equity instruments can be measured reliably, is measured at fair value at the date of acquisition. They
are recorded in the cost or expense, and the shareholder's equity is increased accordingly.
② Cash-settled share-based payment
Cash-settled share-based payment shall be measured according to the fair value of liabilities determined on the basis of shares or other
equity instruments undertaken by the Group. In the case that the right is exercised immediately after the grant, it is recorded in relevant
cost or expense, and the liability is increased accordingly. If the right is exercised only after the completion of services in the vesting
period and satisfaction of stipulated performance conditions, on each balance sheet date within the vesting period, based on the best
estimate of the vesting condition and according to the fair value of the liabilities assumed by the Group, the services acquired in the
current period are recorded in the costs or expenses, and the liability is increased accordingly.
On each balance sheet date and settlement date before the settlement of related liabilities, the fair value of liabilities shall be re-measured,
and the changes shall be recorded in the current gains and losses.
(2) Accounting treatment related to modification and termination of share-based payment plan
When the Group modifies the share-based payment plan, if the fair value of the granted equity instruments is increased by modification,
the increase of the services acquired shall be recognized according to the increase of the fair value of the equity instruments. The
increase of fair value of equity instruments refers to the difference between the fair values of equity instruments before and after
modification on the modification date. If the total fair value of share-based payment is reduced by modification or other ways that are
unfavorable to employees, the accounting treatment of the acquired services will continue, as if the change never happened unless the
Group cancels some or all of the granted equity instruments.
During the vesting period, if the granted equity instruments are canceled, the Group will treat the cancellation of the granted equity
instruments as accelerated exercise, and immediately record the amount to be recognized in the remaining vesting period into the
current gains and losses, and recognize the capital surplus at the same time. If the employee or other party can choose to meet the non-
vesting condition but fails to meet it during the vesting period, the Group will treat it as cancellation for granting equity instruments.
(3) Accounting treatment of share-based payment transactions involving the Group and the Company's shareholders or de facto
controllers
Share-based payment transactions involving the Group and the Company's shareholders or de facto controllers, where one of the
settlement enterprise and the service receiving enterprise is located within the Group and the other outside the Group, are treated in the
Group's consolidated financial statements in accordance with the following provisions:
①If the settlement enterprise settles the transaction with its own equity instruments, the share-based payment transaction is treated as
equity-settled share-based payment; otherwise, it is treated as cash-settled share-based payment.
If the settlement enterprise is an investor of the service recipient, it is recognized as a long-term equity investment in the service
recipient based on the fair value of the equity instrument or the fair value of the liabilities to be assumed at the date of grant, with
capital surplus (other capital surplus) or liabilities recognized at the same time.
②If the service recipient does not have a settlement obligation or has granted its own equity instruments to its own employees, the
share-based payment transaction is treated as equity-settled share-based payment; if the service recipient has a settlement obligation
and has granted its own equity instruments to its own employees, the share-based payment transaction is treated as cash-settled share-
based payment.
If the service recipient and the settlement enterprise are not the same entity, the share-based payment transaction shall be recognized
and measured in the separate financial statements of both the service recipient and the settlement enterprise, respectively, in accordance
with the above principles.
32. Revenue
Revenue recognition and measurement accounting policies disclosed by business type
Revenue represents the total inflow of economic benefits arising from the Group's ordinary activities, leading to an increase in
shareholders' equity and not related to shareholders' invested capital. Revenue from contracts between the Group and clients is
recognized when the client obtains control over the relevant goods (including labor, the same below), subject to the following conditions
being met simultaneously: parties to the contract have approved and committed to fulfilling their respective obligations; the contract
defines the rights and obligations of the parties regarding the transferred goods or labor provision; the contract includes clear payment
terms for the transferred goods; the contract holds commercial substance, meaning it will alter the Group's future cash flows' risk,
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timing, or amount upon fulfillment; and it is probable that the consideration from transferring goods to clients will be recoverable. In
this context, acquiring control over the relevant goods means being able to dominate the use of the goods and derive almost full
economic benefits from it.
At the contract commencement date, the Group identifies each individual performance obligation existing under the contract, and
apportions the trading price to each individual performance obligation based on the proportion of the selling prices of the goods
committed by the individual performance obligations. The trading price is determined by taking into account of the influence of variable
consideration, major financing components in the contract, non-cash consideration, consideration payable to clients and other factors.
If each individual performance obligation under the contract meets any of the following conditions, the Group will, according to the
progress of performance in the relevant performance period, recognize the part of trading price apportioned to the individual
performance obligation as a revenue: the client obtains and consumes economic benefits from the performance by the Group at the
time of performance; the client has control over the goods in production during the performance by the Group; the goods produced
during the performance by the Group have irreplaceable use, and the Group is entitled to be paid for the completed part of the obligation
up to now in the entire contract period. The performance schedule is determined by output method or input method according to the
nature of the goods transferred. If the performance schedule cannot be reasonably determined and the incurred costs of the Group are
expected to be compensated, the revenue is recognized according to the amount of the incurred costs until the performance schedule
can be reasonably determined.
If none of the above conditions is met, the Group recognizes revenue at the point in time when the client obtains control over the
relevant goods, based on the transaction price apportioned to that single performance obligation. To determine whether the client
obtains the control over the goods, the Group considers the following indications: the Group enjoys the current right to be paid for the
goods, and the client has the current obligation to pay for the goods; the Group has transferred legal ownership of the goods to the
client, and the client has owned the legal ownership over the goods; the Group has delivered the goods physically to the client, and the
client has possessed the goods in kind; the Group has passed on to the client major risks and rewards of the ownership of the goods,
and the client has received the major risks and rewards of the ownership of the goods; the client has accepted the goods; and any other
indication that the client has obtained the control over the goods.
Specific methods for revenue recognition from product sales:
The Group's sales business is categorized into domestic sales and overseas sales. Both domestic sales and overseas sales have general
mode and VMI mode, with specific revenue recognition policies for sales as follows:
① Domestic sales
A. General sales mode
The Group arranges production according to a sales contract or order with a client; upon shipment from the warehouse, the products
are transported and delivered to the place of delivery designated by the client; the client's warehousing employee checks the quantity
of the products and also carries out a spot check for the quality of the products; after the quantity and quality are accepted, the employee
will sign and stamp on the receipt for confirmation. The revenue is recognized when the Group obtains the signed and stamped receipt
or when the Group obtains the signed and stamped receipt and makes a reconciliation with the client.
B. VMI sales mode
The Group arranges production according to a sales contract or order with the client; upon shipment from the warehouse, the products
will be transported and delivered to the delivery place designated by the client; the warehouse personnel checks the quantity of the
products and also carries out a spot check for the quality of the products; after the quantity and quality are accepted, the warehouse
personnel will sign and stamp on the receipt for confirmation. Sales revenue will be recognized based on the actual receipt of goods by
the client and reconciliation with the client.
② Overseas sales
A. General sales mode
The Group arranges production according to a sales contract or order with a client; the export delivery is made through customs
clearance after the products are verified as qualified through inspection; for the purpose of delivering the products, the revenue is
recognized at the time of control transfer depending on specific terms of trade.
B. VMI sales mode
The Group arranges production according to a sales contract or order with a client; the export is made through customs clearance after
the products are verified as qualified through inspection; after the Group completes export declaration formalities and obtains an export
declaration form, and the products are transported to the place designated by the client, the revenue is recognized when the client
accepts the products.
The same type of business, if with different operating models, entails different revenue recognition and measurement methods.
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None
33. Contract costs
Contract costs include incremental costs incurred to obtain contracts and contract performance costs.
If the incremental cost incurred by the Group to acquire the contract is expected to be recovered, it is recognized as an asset as the
contract acquisition cost.
A cost incurred for performing a contract which does not fall within the regulated scope of accounting standards for business enterprises
other than Accounting Standards for Business Enterprises No. 14 - Revenue (revised in 2017) shall be recognized as an asset if: ①
such cost directly relates to a current or expected contract, including direct labor, direct materials, manufacturing costs (or similar
costs), costs clearly borne by clients and other costs only incurred due to the contract; ② such cost increases the resources of the Group
for fulfilling its obligations in the future; and ③ such cost is expected to be recoverable.
Assets related to contract costs are amortized to profit or loss using the same basis as revenue recognition for the goods to which the
asset relates; however, if the asset is amortized over a period of less than one year, it is recognized in profit or loss in the period in
which it is incurred.
When the carrying amount of an asset related to contract costs is greater than the difference between the following two items, the
Company makes a provision for impairment and recognizes it as an asset impairment loss for the excess:
①The residual consideration that the Group expects to obtain for the transfer of goods or services related to the asset;
②The estimated costs to be incurred for the transfer of such related goods or services.
If there is a subsequent reversal of the provision for asset impairment, the carrying amount of the asset after the reversal should not
exceed its value on the reversal date if no impairment provision had been made.
34. Government grants
Government grants refer to the monetary assets and non-monetary assets obtained by the Group from the government free of charge,
excluding the investment made by the government as an investor which enjoys the corresponding owner's equity. Government grants
are divided into asset-related government grants and income-related government grants. Asset-related government grants refer to the
government grants obtained by the Group and used for acquiring or forming long-term assets by other means. Other government grants
are defined as government grants related to income. If no target of grants is specified in government documents, government grants are
classified into government grants related to assets and government grants related to income as follows: (1) if the government document
stipulates grants for a defined project, the grants will be divided according to the proportion of expenditures transformed into assets
and expenditures recorded in expenses in the budget of the defined project, and the proportion will be reviewed at each balance sheet
date and be changed if necessary; and (2) if the government document contains general statement on the purpose of grants, other than
a defined project, the grants will be treated as government grants related to income. Government grants in the form of monetary assets
shall be measured at the amount received or receivable. Government grants in the form of non-monetary assets shall be measured at
fair value. If the fair value cannot be reliably acquired, the government grants shall be measured at nominal amount. Government grants
measured at nominal amount shall be directly recorded in the current gains and losses.
The Group recognizes and measures government grants generally at the time of receipt according to the actually received amounts.
However, at the end of the period, the subsidy shall be measured according to the amount receivable when there is conclusive evidence
that it can meet the relevant conditions stipulated by the financial support policy and is expected to receive financial support funds. A
government grants measured at the amount receivable shall meet the following conditions: (1) the amount of grant receivable has been
confirmed in a governmental document or can be reasonably estimated according to any officially issued measures for the management
of financial support funds, without significant uncertainty in the estimated amount; (2) the measurement is based on the financial
support projects and its measures for the management of financial support funds officially released and proactively disclosed by local
fiscal authority according to the Government Information Disclosure Regulations, and the measures are inclusive (applicable to any
eligible enterprise), other than for specific enterprises; (3) the relevant grant approval document has clearly stated the period of payment,
and as the payment of the grant is guaranteed by corresponding fiscal budgets, there is reasonable assurance that the payment will be
made within certain time of period; and (4) other relevant conditions should be met according to the actual situation of the Group and
the grant (if any).
Asset-related government grants are recognized as deferred income, and shall be recorded in current gains and losses in stages according
to a reasonable and systematic method within the useful life of the relevant assets. If income-related government grants are received as
compensation for related costs or losses in future periods, they are recognized as deferred income, and are recorded in current gains
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and losses during the period when the related costs or losses are recognized; those received as compensation for related costs or losses
incurred are directly included in the profit or loss of the current period. If a government grants contains an asset-related component and
an income-related component, the two components are subject to separate accounting treatment. If it is difficult to distinguish them,
the subsidy shall be classified as income-related government grants.
Government grants related to the daily operating activities of the Group shall be recorded in other income according to the nature of
operating business. Government grants unrelated to the daily activities are recorded in non-operating income.
Where any recognized government grants need to be returned, in the case of related deferred income balance, the carrying amount of
the deferred income balance shall be written down, and any excess shall be recognized in the profit or loss of the current period. In
other circumstances, the returned subsidy is directly recorded in the profit or loss of the current period.
35. Deferred tax assets/liabilities
(1) Current income taxes
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are measured at the amount expected
to be paid (or returned) according to the requirements of tax laws. The taxable income used to calculate the current income tax expense
is derived from adjustments made to the pre-tax accounting profit for the current reporting period in accordance with relevant tax
regulations.
(2) Deferred tax assets and liabilities
For temporary differences between the carrying amounts of certain assets or liabilities and their tax bases, or between the carrying
amounts of those items that are not recognized as assets or liabilities and of which the tax bases can be determined according to tax
laws and tax bases, deferred tax assets and liabilities are recognized using the balance sheet liability method.
For temporary differences arising from the initial recognition of goodwill, no corresponding deferred tax liabilities are recognized. For
temporary differences arising from the initial recognition of assets or liabilities in transactions other than business combinations that
do not affect either the accounting profit or taxable income (or deductible losses), and where the initial recognition of assets and
liabilities does not result in equivalent taxable temporary differences and deductible temporary differences, no corresponding deferred
income tax assets or liabilities are recognized. In addition, for the taxable temporary differences associated with investments in
subsidiaries, associates and joint ventures, if the Group is able to control the timing of the reversal of the temporary difference and it
is probable that the temporary difference will not reverse in the foreseeable future, no deferred tax liability is recognized. Except for
the above exceptions, the Group recognizes deferred tax liabilities arising from all other taxable temporary differences. For the
deductible temporary differences associated with investments in subsidiaries, associates and joint ventures, the corresponding deferred
tax assets shall not be recognized if it is not probable that the temporary difference will reverse in the foreseeable future, or if it is not
probable that taxable profits will be available in the future against which the deductible temporary difference can be utilized. For the
above exceptions, deferred tax assets for deductible temporary differences are recognized by the Group to the extent that it is probable
that taxable profits will be available against which the deductible temporary differences can be utilized.
For deductible losses and tax credits that can be carried forward to later years, the corresponding deferred tax assets are recognized to
the extent that the future taxable income that can be used to offset the deductible losses and tax credits is likely to be obtained.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates, according to tax laws, that are expected to be
applicable when the asset is realized or the liability is settled.
On the balance sheet date, the carrying amount of deferred tax assets shall be reviewed. If it is unlikely to obtain sufficient taxable
income in the future to offset against the profits arising from deferred tax assets, the carrying amount of the deferred tax assets shall be
written down. When it is probable that sufficient taxable income will be available, such written-down amount shall be subsequently
reversed.
(3) Income tax expenses
Income tax expenses include current income tax and deferred income tax.
Except that current income taxes and deferred taxes arising from transactions or events recognized in other comprehensive income or
directly recorded in shareholders' equity are recorded in other comprehensive income or shareholders' equity, and that deferred taxes
arising from business combinations adjust the carrying amount of goodwill, all other current income taxes and deferred tax expenses
or gains are recorded in the profit or loss of the current period.
(4) Income tax offset
When there is a legal right to settle on a net basis and the intention is to settle on a net basis or to realize assets and to settle liabilities
simultaneously, the current income tax assets and current income tax liabilities of the Group are offset and presented as net amount.
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When there is a legal right to settle current income tax assets and current income tax liabilities on a net basis, and the deferred tax
assets and deferred tax liabilities are related to the income tax levied by the same tax administration department on the same tax payer
or to different tax payers, but in each future period of reversing material deferred tax assets and liabilities, the tax payers involved
intend to settle the current income tax assets and liabilities on a net basis or realize assets and settle liabilities at the same time, the
deferred tax assets and deferred tax liabilities of the Group are offset and presented as net amount.
36. Lease
(1) Accounting treatment of leases as lessee
A lease is a contract under which the Group transfers or acquires the right to control the use of one or more identified assets for a
specific period of time in exchange for consideration or payment. At the inception date of a contract, the Group assesses whether the
contract is a lease or contains a lease.
The Group acts as lessee:
The Group's categories of leased assets are mainly buildings.
①Initial measurement
On the commencement date of a lease, the Group recognizes the right to use the leased asset over the lease term as a right-of-use asset,
and recognizes the present value of the outstanding lease payments as a lease liability, excluding short-term leases and leases of low-
value assets. When measuring the present value of a lease payment, the Group uses the interest rate implicit in the lease as the discount
rate, and adopts the incremental borrowing rate as the lessee's discount rate if the interest rate implicit in the lease is not determinable.
②Subsequent measurement
The Group depreciates right-of-use assets according to the depreciation provisions outlined in Accounting Standards for Business
Enterprises No. 4 - Fixed Assets. See Note V.21 for details. If ownership of the leased asset can be reasonably assured at the end of the
lease term, the Group depreciates it over the remaining useful life of the asset. If the Group can reasonably determine that it will obtain
the ownership of leased assets when the lease term expires, the Group depreciates the right-of-use assets over the remaining useful life
of the leased assets.
For lease liabilities, the Group calculates its interest expense at a fixed periodic rate for each period during the lease term, which is
charged to current profit or loss or included in the cost of the related assets. Variable lease payments not included in the measurement
of lease liabilities, when actually incurred, shall be recorded in the current gains and losses or related asset costs.
Following the commencement date of the lease term, when there are changes in the substantive fixed payments, the projected amount
payable for the residual value of the guarantee, the indexes or ratios used to determine the lease payments, or the valuation results or
actual exercise of purchase options, lease renewal options or termination options, the Group re-measures the lease liability based on
the present value of the lease payments after such changes and adjusts the book value of the right-of-use asset accordingly. If the
carrying amount of the right-of-use asset has been reduced to zero, but the lease liability needs to be further reduced, the Group
recognizes the remaining amount in profit or loss for the current period.
③ Short-term leases and leases of low-value assets
For short-term leases (with a lease term of less than 12 months from the commencement date) and leases of low-value assets, the Group
adopts a simplified approach by not recognizing right-of-use assets and lease liabilities; instead, the Group recognizes the lease
payments as part of the cost of the related assets or in profit or loss for the current period, on a straight-line basis or other systematic
and reasonable basis, in each period during the lease term.
(2) Accounting treatment of leases as lessor
The Group acts as lessor:
The Group classifies leases into finance leases and operating leases based on their transaction substance at the inception date of the
lease. A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of the leased asset. Operating
leases are leases other than finance leases.
①Operating lease
The Group uses the straight-line method to recognize lease collections under operating leases as rental income in each period during
the lease term. Variable lease payments relating to operating leases that are not recognized as lease collections are recognized in profit
or loss when they are actually incurred.
②Finance lease
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On the commencement date of the lease term, the Group recognizes finance lease receivables and derecognizes finance lease assets.
Finance lease receivables are initially measured at the net investment in the lease (the sum of the unguaranteed residual value and the
present value of lease receivables not yet received at the commencement date of the lease term discounted at the interest rate embedded
in the lease), and interest income is recognized over the lease term calculated at a constant periodic rate. Variable lease payments
obtained by the Group that are not included in the measurement of the net investment in leases are recognized in profit or loss when
they are actually incurred.
37. Specific reserve
According to the relevant regulations of the Ministry of Finance and the Ministry of Emergency Management, the Group accrues
specific reserve for production safety. The specific reserve is mainly used for safety expenditure in the process of production and
operation.
The provision for specific reserve is recognized as relevant cost or profit or loss for the current period, and it is also included in specific
reserve. The specific reserve is written down when withdrawal of safety fund is of expense expenditure. If it is capital expenditure, the
expenditure incurred is recorded in construction in progress and recognized as fixed assets when the project is completed and is ready
for the intended use, and meanwhile, specific reserve is written down at the cost of the fixed assets and accumulated depreciation is
recognized at the same amount. Consequently, such fixed assets are not depreciated in subsequent periods.
38. Other significant accounting policies and accounting estimates
While using accounting policies, due to the uncertainty in operating activities, the Group needs to make judgment, estimates and
assumptions on the book value of accounts which cannot be measured accurately. The judgment, estimates and assumptions are made
based on the historical experience of the Group's management and other factors that are considered to be relevant. The judgments,
estimates and assumptions would affect the reported amounts of incomes, expenses, assets and liabilities, as well as the disclosure of
contingent liabilities at the balance sheet date. However, the actual results from the uncertainty in the estimates may differ from the
current estimates made by the Group's management, subject to further significant adjustments to the carrying amounts of the affected
assets or liabilities.
The above judgments, estimates and assumptions will be reviewed periodically by the Group on the going-concern basis. If a change
in accounting estimates only affects the period in which the change occurs, the affected amount will be recognized in the period in
which the change occurs. If the change affects both the period in which the change occurs and future periods, the affected amount will
be recognized in the period in which the change occurs.
At the balance sheet date, the major fields in which the Group is required to make the judgments, estimates and assumptions on the
amounts in the financial statements are shown below:
(1) Revenue recognition
As stated in this Note V. 32. '' Revenue '', the Group's revenue recognition involves the following significant accounting judgments and
estimates: identification of client contracts; estimation of the recoverability of the considerations enjoyed due to the transfer of goods
to clients; identification of performance obligations in contracts; estimation of the variable consideration in a contract and the amount
of accumulated recognized revenue that is unlikely to be significantly reversed when the relevant uncertainty is eliminated; whether
there is material financing component in a contract; estimation of separate selling prices of individual performance obligations in a
contract; determination on whether the performance obligation shall be performed in a time span or at a point of time; and determination
of performance progress.
The Group makes judgments based on historical experience and practices, and major changes in judgments and estimates would have
impact (and even significant impact) on the change of operating revenue, operating cost, and profit and loss during the current or future
periods.
(2) Lease
① Identification of a lease
While identifying that a contract is or contains a lease, the Group needs to assess whether there is an identified asset and the client has
the right to use the asset for a certain period. During assessment, the Group shall consider the nature or substantial replacement of the
asset, and whether the client has the right to obtain almost all economic benefits arising from the use of the asset during the period and
can control the use of the asset.
② Classification of a lease
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The Group as the lessor classifies leases into operating leases and financing leases. In the classification process, the management needs
to make appropriate analysis and judgment on whether all risks and rewards related to the ownership of leased assets have been
substantially transferred to the lessee.
③ Lease liabilities
The Group, as a lessee, initially measures the lease liabilities at the present value of lease payments that are unpaid at the lease
commencement date. For measuring the present value of the lease payment, the Group estimates the discounting rate in use and the
lease term of the lease contract with an option of renewal or termination. For assessing the lease term, the Group considers all the facts
and circumstances related to the economic benefits brought by the exercise of the option by the Group, including expected changes in
the facts and circumstances from the lease commencement date to the option exercise date. Different judgments and estimates would
affect the recognition of lease liabilities and right-of-use assets and further affect the profit or loss of subsequent periods.
(3) Impairment of financial assets
The Group assesses impairments of financial instruments using the expected credit loss model, where the Group is required to make
significant judgments and estimates, as well as consider all reasonable and evidence-based information, including forward-looking
information. In making the judgments and estimates, the Group predicts expected changes in debtor's credit risk based on historical
data, as well as economic policies, macroeconomic indicators, industry risks, external market conditions, technical conditions, changes
in client conditions and other factors.
(4) Provisions for the decline in value of inventories
Under accounting policies for inventories, the Group measures inventories according to the lower of cost and net realizable value. For
the inventories with cost higher than net realizable value as well as obsolete and unsalable inventories, the Group calculates provisions
for the impairment of inventories. The inventories are impaired to their net reliable value, depending on the assessment of salability of
inventories and their net realizable value. To identify inventory impairment, the management is required to make judgments and
estimates after obtaining conclusive evidence, as well as considering the purpose of inventories held, the impact of events occurring
after the balance sheet date and other factors. Any difference between actual results and prior estimates will, in the period when relevant
estimates are changed, affect the carrying amount of inventories and the provision for inventory impairment or reversal thereof.
(5) Fair value of financial instruments
If there is no financial instrument in an active trading market, its fair value is determined by the Group through various valuation
methods. The valuation techniques include disclosed cash flow modeling, etc. In the valuation process, the Group needs to estimate
future cash flow, credit risk, market volatility and correlation, etc. and choose an appropriate discounting rate. These relevant
assumptions are uncertain, and their changes would affect the fair value of financial instruments. For equity instrument investments or
contracts with public quotes, the Group will not regard costs as the best fair value estimate.
(6) Impairment provision for long-term assets
For non-current assets other than financial assets, the Group will, at the balance sheet date, judges whether there is an indication of
impairment. For intangible assets with an uncertain useful life, the impairment test will be carried out annually and when there is an
indication of impairment. The impairment test will be carried out for non-current assets other than financial assets, when there is an
indication that the carrying amount cannot be recovered.
When the book value of an asset or group of assets is higher than the recoverable amount, the higher of the net of the fair value less
disposal costs and the present value of estimated future cash flows represents the impairment.
The net of the fair value less disposal costs is determined by the sales agreement price or observable market price of similar assets in
fair trade reduced by incremental costs directly attributable to the disposal of the asset.
Important judgments shall be made on the output, selling price, related operating costs and discount rate used in calculating present
value of the asset (or a group of assets) in estimation of present value of future cash flows. When estimating the recoverable amount,
the Group uses all relevant information available, including the output, selling price and related operating costs predicted on the basis
of reasonable and evidence-based assumptions.
The Group tests whether goodwill is impaired at least annually. This requires estimating the present value of future cash flows of an
asset group or combination of asset groups to which goodwill has been allocated. When estimating the present value of future cash
flows, the Group needs to predict cash flows generating from an asset group or combination of asset groups in the future, and chooses
an appropriate discount rate to determine the present value of future cash flows.
(7) Depreciation and amortization
The Group depreciates and amortizes investment properties, fixed assets and intangible assets over their respective useful life, using
the straight-line method, with their respective residual value taken into account. The Group periodically reviews the useful life of assets
to determine the amounts of depreciation and amortization expenses for each reporting period. The useful life is determined by the
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Group based on its historic experience acquired on similar assets and expected technical development. For significant changes in prior
estimates, depreciation and amortization expenses will be adjusted in the coming periods.
(8) Development costs
When determining capitalized amounts, the Group's management needs to assume estimated future cash flows, appropriate discount
rates and expected return periods of relevant assets.
The Group's management believes that the products with its self-developed proprietary technology have a broad market and good
prospects, and the market reaction to the products produced with these intangible assets also supports the management's pre-estimated
income arising from the project. However, the increasing competition makes the management reconsider the assumptions about market
share and estimated gross profits of the products. After a thorough review, the Group's management believes that the book value of
intellectual properties can be fully recovered notwithstanding a lowered rate of return of the products. The Group will continue to keep
close attention on relevant developments. Once there is an indication that it is necessary to adjust the assumptions of relevant accounting
estimates, the Group will make adjustment in the period when that indication appears.
(9) Deferred tax assets
To the extent that it is likely that there will be sufficient taxable profits to cover the losses, the Group recognizes deferred tax assets for
all unused tax losses. In this case, the Group's management shall make important judgments to estimate the time and amount of future
taxable profits and, by taking into account of its tax plan, to determine the amount of deferred tax assets that should be recognized.
(10) Income tax
In normal operating activities of the Group, there are some transactions with certain uncertainties in final tax treatment and calculation.
Tax deductible expenses for some items are subject to review and approval by tax authority. Any difference between final results and
initially estimated amounts due to these tax matters exerts impact on income taxes and deferred taxes of the period when the final
results are determined.
39. Changes in significant accounting policies and accounting estimates
(1) Important changes in accounting policy
Applicable Not applicable
Unit: RMB
Contents and causes of changes in accounting policy Statement items significantly affected Impact amount
On November 30, 2022, the Ministry of Finance issued the
Interpretation No. 16 of the Accounting Standards for Business
Enterprises (Finance and Accounting [2022] No. 31) ("the
Deferred income tax assets, deferred
Interpretation"). The Interpretation stipulates that "deferred See the Note V. 39. (3) for
income tax liabilities, undistributed
income taxes related to assets and liabilities arising from more details.
profits, and minority interests
individual transactions are not applicable to initial recognition
exemption", and this would become effective on January 1,
2023.
(2) Changes in significant accounting estimates
Applicable Not applicable
(3) Status of financial statement adjustments as of the beginning of the year of first-time implementation of the new
accounting standards starting from 2023
Applicable Not applicable
Adjustment description
On November 30, 2022, the Ministry of Finance issued the Interpretation No. 16 of the Accounting Standards for Business Enterprises
(Finance and Accounting [2022] No. 31) ("the Interpretation"). The Interpretation stipulates that "deferred income taxes related to
assets and liabilities arising from individual transactions are not applicable to initial recognition exemption", and this would become
effective on January 1, 2023.
For lease liabilities and right-of-use assets recognized at the beginning of the earliest period for the presentation of financial statements
in which this Interpretation is first applied as a result of a single transaction to which this Interpretation applies and which give rise to
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a taxable temporary difference and a deductible temporary difference, the Company shall, in accordance with the Interpretation and
The Accounting Standards for Business Enterprises No. 18 - Income Taxes, adjust the cumulative effect to retained earnings as well as
to other relevant financial statement items at the beginning of the earliest period for the presentation of the financial statements. As the
Interpretation has not resulted in material impact on the Company's financial statements, no retrospective adjustments have been made
to prior years' financial statements.
The effect of the above changes in accounting policies on the financial statements as of January 1, 2023 is presented below:
Consolidated balance sheet
Item December 31, 2022 January 1, 2023 Adjustments
Deferred tax assets 1,369,530,623.51 1,461,726,750.47 92,196,126.96
Deferred tax liabilities 816,118,632.40 906,537,829.44 90,419,197.04
Undistributed profits 16,507,798,239.34 16,509,551,595.59 1,753,356.25
Minority interests 765,942,754.69 765,966,328.36 23,573.67
Company balance sheet
Item December 31, 2022 January 1, 2023 Adjustments
Deferred tax assets 788,677,414.86 830,807,911.11 42,130,496.25
Deferred tax liabilities 536,571,810.07 578,621,000.58 42,049,190.51
Undistributed profits 9,410,101,500.47 9,410,182,806.21 81,305.74
40. Others
None
VI. Taxable Items
1. Major tax types and rates
Tax types Taxation basis Tax rate
Output taxes on taxable income shall be calculated at the rate of 13%, 9% and 6%,
VAT and value added taxes are calculated and paid according to the difference resulting 13%, 9%, 6%
from the deduction of the allowed deductible input tax in the period.
City maintenance and
7% and 5% of actually-paid turnover tax 7%、5%
construction tax
15% or 25%, for overseas subsidiaries, the tax shall be paid according to the
Enterprise income tax 25%、15%
statutory tax rate of the country or region where it is located.
Education surcharge 3% of the amount of actually-paid turnover tax 3%
Local education surcharges 2% of the amount of actually-paid turnover tax 2%
Disclose the specific information in the case of tax payers with different tax rates of enterprise income tax
Name of taxpayer Rate of income tax
Goertek Inc. 15%
Weifang Goertek Electronics Co., Ltd. 15%
Goertek Microelectronics Inc. 15%
Qingdao Goertek Microelectronics Research Institute Co., Ltd. 25%
Qingdao Goertek Intelligent Sensor Co., Ltd. 25%
Weifang Goertek Microelectronics Co., Ltd. 15%
Rongcheng Goertek Microelectronics Co., Ltd. 15%
Beijing Goertek Microelectronics Co., Ltd. 25%
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Name of taxpayer Rate of income tax
Shenzhen Goertek Microelectronics Co., Ltd. 5%
Wuxi Goertek Microelectronics Co., Ltd. 25%
Shanghai Goertek Microelectronics Co., Ltd. 25%
Goertek Microelectronics Holdings Co., Ltd. 16.5%
Goertek Microelectronics (Hong Kong) Co., Ltd. 16.5%
The federal tax rate for enterprise income tax is 21%, and the local
GOERTEK MICROELECTRONICS CORPORATION
enterprise income tax rate in California is 8.84%.
Corporation tax: Tax rate shall be 9% if the income is less than
KRW 200 million; 19% if the income is KRW 200 million-20
GOERTEK MICROELECTRONICS KOREA Co., LTD. billion; 21% if the income is KRW 20 billion-300 billion; and 24%
if the income is more than KRW 300 billion.
local corporation tax: 10% of taxable income
Goertek Microelectronics Vietnam Company Limited 20%
GMI Technology GmbH 24%
Weifang Goertek Trading Co., Ltd. 25%
Yishui Goertek Electronics Co., Ltd. 25%
Yili Precision Manufacturing Co., Ltd. 15%
Weifang Goertek Communication Technology Co., Ltd. 25%
Goertek Optical Technology Co., Ltd 15%
Goertek Optical Technology (Qingdao) Co., Ltd 25%
Goertek Optical Technology (Shanghai) Co., Ltd 25%
Uphoton Technology (Shaoxing) Co., Ltd. 25%
Uphoton Technology (Beijing) Co., Ltd. 25%
Jiaxing Uphoton Optoelectronics Technology Co., Ltd. 15%
Shaoxing Uphoton Precision Technology Co., Ltd. 25%
Hangzhou Uphoton Optoelectronics Technology Co., Ltd. 25%
Tianjin Uphoton Technology Co., Ltd. 25%
Nanjing Uphoton Technology Co., Ltd. 25%
Hefei 3D OptoLink Technology Co., Ltd. 25%
Jiaxing Guochao Optoelectronics Technology Co.,Ltd. 25%
Goertek Technology Co., Ltd. 15%
Beijing Goertek Technology Co., Ltd. 15%
Qingdao Goertek Acoustics Technology Co., Ltd. 25%
Shenzhen Goertek Technology Co., Ltd. 15%
Shanghai Goertek Technology Co., Ltd. 25%
Nanjing Goertek Technology Co., Ltd. 25%
Weifang Lokomo Precision Industry Co., Ltd. 15%
Goertek Investment Co., Ltd. 25%
Beijing Goertek Investment Management Co., Ltd. 25%
Olive Smart Hardware Investment Center LP --
Dongguan JoyForce Precision Manufacturing Co., Ltd. 15%
Goertek Intelligence Technology Co., Ltd. 15%
Rongcheng Goertek Technology Co., Ltd. 25%
Qingdao Goertek Commercial Factoring Co., Ltd. 25%
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Name of taxpayer Rate of income tax
Nanning Goertek Electronics Co., Ltd 25%
Nanning Goertek Trading Co., Ltd. 25%
Xi'an Goertek Electronic Technology Co., Ltd. 15%
Yishui TECO Electronic Technology Co., Ltd. 25%
Qingdao Resonance Phase I Venture Capital Fund Partnership
--
(Limited Partnership)
Weifang Goertek Electronics Co., Ltd. 25%
Qingdao Goertek Horizons Technology Co., Ltd 25%
Weifang High-tech Zone Goertek Education Center 25%
Chongqing Goertek Auto Technology Co., Ltd. 25%
Goertek Vina Co., Ltd 20%
Corporation tax: Tax rate shall be 9% if the income is less than
KRW 200 million; 19% if the income is KRW 200 million-20
Goertek Technology Korea Co., Ltd. billion; 21% if the income is KRW 20 billion-300 billion; and 24%
if the income is more than KRW 300 billion.
local corporation tax: 10% of taxable income
The tax rate of 8.25% is applied to the taxable profit which does
Goertek (HongKong) Co., Limited not exceed HKD 2,000,000, and the tax rate of 16.5% is applied to
the part of taxable profit which exceeds HKD 2,000,000.
Goertek Technology Vina Company Limited 20%
Goertek Precision Industry Vietnam Company Limited 20%
Goertek Smart Technology Vina Co.,Ltd. 20%
Goertek Europe ApS 22%
Goertek Seiki Technology Co., Ltd. Combined tax rate of 39.35%
Optimas Capital Partners Fund LP --
The federal tax rate for enterprise income tax is 21%, and the local
Goertek Electronics, Inc.
enterprise income tax rate in California is 8.84%.
Goertek Technology Taiwan Co., Ltd. 20%
Goertek Technology Japan Co., Ltd. Combined tax rate of 38%
Goertek Technology (Hong Kong) Co., Limited 16.5%
2. Tax incentives
(1) According to the Announcement on the Filing of the First Batch of High-tech Enterprises Identified and Reported by Shandong
Province's Identification Agency in 2023 issued by the Office of the Leading Group for the Recognition and Management of National
High-tech Enterprises on December 18, 2023, the Company has been recognized as a high-tech enterprise for a three-year validity
period, and the preferential period for corporate income tax is from January 1, 2023 to December 31, 2025. The corporate income tax
rate of 15% applied to the Company for FY2023.
(2) According to the Announcement on the Filing of the Second Batch of High-tech Enterprises Identified and Reported by Shandong
Province's Identification Agency in 2023 issued by the Office of the Leading Group for the Recognition and Management of National
High-tech Enterprises on December 28, 2023, the subsidiaries, namely Weifang Goertek Electronics Co., Ltd., Weifang Goertek
Microelectronics Co., Ltd. and Weifang Lokomo Precision Industry Co., Ltd., have been recognized as high-tech enterprises for a
three-year validity period. The preferential period for corporate income tax is from January 1, 2023 to December 31, 2025. The
corporate income tax rate of 15% applied to Weifang Goertek Electronics Co., Ltd., Weifang Goertek Microelectronics Co., Ltd. and
Weifang Lokomo Precision Industry Co., Ltd. for FY2023.
(3) According to the Announcement on Filing the First Batch of High-Tech Enterprises in Qingdao in 2022, issued by the Office of
Leading Group for the Recognition and Management of National High-Tech Enterprises on January 6, 2023, the subsidiary Goertek
Microelectronics Inc. has been recognized as a high-tech enterprise for a validity period of 3 years, and its preferential period for
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enterprise income tax is from January 1, 2022 to December 31, 2024. The corporate income tax rate of 15% applied to Goertek
Microelectronics Inc. for FY2023.
(4) According to the Announcement on Filing the First Batch of High-Tech Enterprises in Shandong Province in 2022, issued by the
Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on January 4, 2023, two subsidiaries,
Rongcheng Goertek Microelectronics Co., Ltd. and Yili Precision Manufacturing Co., Ltd., have been recognized as a high-tech
enterprise for a validity period of 3 years, and the preferential period for enterprise income tax is from January 1, 2022 to December
31, 2024. The enterprise income tax rate of 15% applied to Rongcheng Goertek Microelectronics Co., Ltd. and Yili Precision
Manufacturing Co., Ltd. for year 2023.
(5) According to the Announcement on Filing the First Batch of High-Tech Enterprises in Shandong Province in 2021 issued by the
Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on January 4, 2022, a subsidiary,
Goertek Optical Technology Co., Ltd, has been recognized as a high-tech enterprise for a validity period of 3 years, and its preferential
period for enterprise income tax is from January 1, 2021 to December 31, 2023. The enterprise income tax rate of 15% applied to the
subsidiary, Goertek Optical Technology Co., Ltd, for year 2023.
(6) According to the Announcement on Filing the First Batch of High-Tech Enterprises in Shandong Province in 2021 issued by the
Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on December 16, 2021, a subsidiary,
Jiaxing Uphoton Optoelectronics Technology Co., Ltd, has been recognized as a high-tech enterprise for a validity period of 3 years,
and its preferential period for enterprise income tax is from January 1, 2021 to December 31, 2023. The enterprise income tax rate of
15% applied to the subsidiary, Jiaxing Uphoton Optoelectronics Technology Co., Ltd., for year 2023.
(7) According to the Announcement on Filing the First Batch of High-Tech Enterprises in Qingdao in 2022 issued by the Office of
Leading Group for the Recognition and Management of National High-Tech Enterprises on December 14, 2022, Goertek Technology
Co., Ltd., has been recognized as a high-tech enterprise for a validity period of 3 years, and its preferential period for enterprise income
tax is from January 1, 2022 to December 31, 2024. The enterprise income tax rate of 15% applied to the subsidiary, Goertek Technology
Co., Ltd., for year 2023.
(8) According to the Announcement on Filing the First Batch of High-Tech Enterprises in Qingdao in 2023 issued by the Office of
Leading Group for the Recognition and Management of National High-Tech Enterprises on January 9, 2024, Beijing Goertek
Technology Co., Ltd., has been recognized as a high-tech enterprise for a validity period of 3 years, and its preferential period for
enterprise income tax is from January 1, 2023 to December 31, 2025. The enterprise income tax rate of 15% applies to the subsidiary,
Beijing Goertek Technology Co., Ltd., for year 2023.
(9) According to the Announcement on Filing the First Batch of High-Tech Enterprises in Shenzhen in 2022 issued by the Office of
Leading Group for the Recognition and Management of National High-Tech Enterprises on December 19, 2022, a subsidiary, Shenzhen
Goertek Technology Co., Ltd., has been recognized as a high-tech enterprise for a validity period of 3 years, and its preferential period
for enterprise income tax is from January 1, 2022 to December 31, 2024. The enterprise income tax rate of 15% applied to the subsidiary,
Shenzhen Goertek Technology Co., Ltd., for year 2023.
(10) According to the Notice on Publishing the Filings of the Second Batch of High-Tech Enterprises in Guangdong Province in 2021
issued by the Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on December 20, 2021,
Dongguan JoyForce Precision Manufacturing Co., Ltd., a subsidiary of the Company, has been recognized as a high-tech enterprise
for a validity period of 3 years, and its preferential period for enterprise income tax is from January 1, 2021 to December 31, 2023. The
enterprise income tax rate of 15% applies to the subsidiary, Dongguan JoyForce Precision Manufacturing Co., Ltd. for year 2023.
(11) According to the Announcement on Filing the Second Batch of High-Tech Enterprises in Guangdong Province in 2022 issued by
the Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on December 22, 2022, Goertek
Intelligence Technology Co., Ltd., a subsidiary of the Company, has been recognized as a high-tech enterprise for a validity period of
3 years, and its preferential period for enterprise income tax is from January 1, 2022 to December 31, 2024. The enterprise income tax
rate of 15% applied to the subsidiary, Goertek Intelligence Technology Co., Ltd., for year 2023.
(12) According to the Announcement of the Ministry of Finance, the State Taxation Administration, and the National Development
and Reform Commission on the Continuation of the Corporate Income Tax Policies for the Development of the Western Region
(Announcement of the Ministry of Finance, the State Taxation Administration, and the National Development and Reform Commission
[2020] No. 23) issued on April 23, 2020, the tax rate for enterprises in the encouraged category based in the western region will be
reduced to 15% starting from January 1, 2021 to December 31, 2030. The enterprise income tax rate of 15% applied to the subsidiary,
Xi'an Goertek Electronic Technology Co., Ltd., for year 2023.
(13) The subsidiary, Goertek (HongKong) Co., Limited, is a qualified entity under the two-tier profits tax system and its taxable profits
are subject to a tax rate of 8.25% on the portion up to HKD 2,000,000 and 16.5% on the portion in excess of HKD 2,000,000.
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(14) According to the Announcement of the Ministry of Finance and the State Taxation Administration on Tax Policies Relating to
Further Supporting the Development of Micro and Small Enterprises and Individual Entrepreneurs (Announcement of the Ministry of
Finance and the State Taxation Administration No. 12 of 2023), from January 1, 2023, to December 31, 2027, for small and micro-
profit enterprises, the portion of their annual taxable income that is not more than RMB 3 million shall be deducted to 25% of their
taxable income, subject to a 20% corporate income tax. The subsidiary, Shenzhen Goertek Microelectronics Co., Ltd., is eligible for
the above tax incentives and implemented an effective enterprise income tax rate of 5% in 2023.
(15) According to the laws of Vietnam, GOERTEK MICROELECTRONICS VIETNAM COMPANY LIMITED and Goertek Smart
Technology Vina Co.,Ltd., subsidiaries of the Company, enjoy tax exemption for 4 years and a 50% reduction of payable tax amounts
for 9 subsequent years. The preferential CIT rate is 10% for 15 years from the first year of income generation. At the same time, starting
from the first profitable year (after making up for the losses of previous years), the first to fourth years are exempt from corporate
income tax, and the fifth to thirteenth years are subject to a 50% reduction in corporate income tax. If the enterprise has no taxable
profit within three years from the start of tax incentive activities, the tax holiday and tax reduction period will be calculated from the
fourth year of operation. The subsidiary is exempt from corporate income tax in 2023.
3. Others
None
VII. Notes to consolidated financial statements
1. Cash at bank and on hand
Unit: RMB
Item Closing balance Opening balance
Cash on hand 60,959.92 33,671.21
Bank deposits 13,158,606,545.21 11,290,088,881.75
Other monetary funds 1,578,644,824.58 1,392,748,538.84
Total 14,737,312,329.71 12,682,871,091.80
Including: Total amounts deposited abroad 1,235,686,922.34 1,370,158,074.20
Other explanations:
Other monetary funds at the end of the period consisted primarily of notes, bonds, letter of credit deposits and funds deposited in the
Company's securities account.
2. Financial assets held for trading
Unit: RMB
Item Closing balance Opening balance
Financial assets at fair value through profit and loss 587,445,091.69 338,662,097.66
Including:
Investments in equity instruments 480,161,497.26 152,722,198.06
Derivative financial assets 104,229,894.43 185,939,899.60
Investment in debt instruments 3,053,700.00
Total 587,445,091.69 338,662,097.66
3. Notes receivable
(1) Notes receivable listed by classification
Unit: RMB
Item Closing balance Opening balance
Bank acceptance notes 139,468,321.29 25,847,492.24
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Item Closing balance Opening balance
Total 139,468,321.29 25,847,492.24
(2) Disclosure by method of bad debt accrual
Unit: RMB
Closing balance Opening balance
Book balance Bad-debt provision Book balance Bad-debt provision
Category
Proportion Book value Proportion Book value
Amount Proportion Amount Amount Proportion Amount
of accrual of accrual
Notes
receivable
with bad debt 139,468,321.29 100.00% 139,468,321.29 25,847,492.24 100.00% 25,847,492.24
provision by
group
Including:
Bank
acceptance 139,468,321.29 100.00% 139,468,321.29 25,847,492.24 100.00% 25,847,492.24
notes
Total 139,468,321.29 100.00% 139,468,321.29 25,847,492.24 100.00% 25,847,492.24
Bad-debt provision by portfolio: Bank acceptance notes
Unit: RMB
Closing balance
Name
Book balance Bad-debt provision Proportion of accrual
Bank acceptance notes 139,468,321.29 0.00 0.00%
Total 139,468,321.29 0.00
Description for basis of determining the group:
Please see Note V.12. "Impairment of Financial Assets" for more details.
If the bad-debt provision for notes receivable is based on the general model of expected credit losses:
Applicable Not applicable
(3) Accrual, recovery or reversal of bad debt provision in current period
None
(4) Notes receivable pledged at the end of the period
Unit: RMB
Item Amount pledged at the end of the period
Bank acceptance notes 866,907.031
Total 866,907.03
Note: 1 The amount of note pledge arises from splitting a large-denomination note into multiple smaller-denomination bank
acceptances.
(5) Notes receivable endorsed or discounted by the Group at the end of the period and not yet due on the
balance sheet date
Unit: RMB
Item Amount derecognized at the end of the period Amount not derecognized at the end of the period
Bank acceptance notes 100,000,000.00
Total 100,000,000.00
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(6) Notes converted to accounts receivable at the end of the period due to non-performance of the drawer
None
(7) Notes receivable actually written off in the current period
None
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4. Accounts receivable
(1) Disclosed by age of accounts receivable
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (including 1 year) 12,543,107,806.98 14,532,856,996.39
1 to 2 years 4,839,100.06 10,227,450.14
2 to 3 years 6,516,243.34 638,249.98
Over 3 years 1,281,318.57 1,471,433.27
3 to 4 years 470,416.03 1,397,650.48
4 to 5 years 643,084.98 0.00
Over 5 years 167,817.56 73,782.79
Total 12,555,744,468.95 14,545,194,129.78
(2) Disclosure by method of bad debt accrual
Unit: RMB
Closing balance Opening balance
Book balance Bad-debt provision Book balance Bad-debt provision
Category
Proportion Book value Proportion Book value
Amount Proportion Amount Amount Proportion Amount
of accrual of accrual
Accounts receivable
with bad debts 12,555,744,468.95 100.00% 131,125,792.14 1.04% 12,424,618,676.81 14,545,194,129.78 100.00% 149,013,346.85 1.02% 14,396,180,782.93
provision by group
Including:
Accounts receivable
12,496,453,228.93 99.53% 130,829,335.94 1.05% 12,365,623,892.99 14,310,390,851.16 98.39% 147,839,330.46 1.03% 14,162,551,520.70
aging group
Factoring receivables
59,291,240.02 0.47% 296,456.20 0.50% 58,994,783.82 234,803,278.62 1.61% 1,174,016.39 0.50% 233,629,262.23
group
Total 12,555,744,468.95 100.00% 131,125,792.14 1.04% 12,424,618,676.81 14,545,194,129.78 100.00% 149,013,346.85 1.02% 14,396,180,782.93
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Bad debt provision on a group basis: Accounts receivable aging group
Unit: RMB
Closing balance
Name
Book balance Bad-debt provision Proportion of accrual
Within 1 year 12,483,816,566.96 124,838,165.68 1.00%
1 to 2 years 4,839,100.06 1,451,730.02 30.00%
2 to 3 years 6,516,243.34 3,258,121.67 50.00%
Over 3 years 1,281,318.57 1,281,318.57 100.00%
Total 12,496,453,228.93 130,829,335.94
Description for basis of determining the group:
Please see Note V.12. "Impairment of Financial Assets".
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Provision for bad debts by group: portfolio of factoring receivables
Unit: RMB
Closing balance
Name
Book balance Bad-debt provision Proportion of accrual
Undue 59,291,240.02 296,456.20 0.50%
Overdue 1-90 days
Overdue 91-180 days
Overdue 181-360 days
Overdue more than 360 days
Total 59,291,240.02 296,456.20
Description for basis of determining the group:
Please see Note V.12. "Impairment of Financial Assets".
If the bad-debt provision for accounts receivable is made in accordance with the general model of expected credit losses:
Applicable Not applicable
(3) Accrual, recovery or reversal of bad debt provision in current period
Provision for bad debts of the current period:
Unit: RMB
Changes in amount of the current period
Category Opening balance Recovery Closing balance
Accrual Write-off Other
or reversal
Accounts receivable aging
147,839,330.46 -18,543,124.53 -1,533,130.01 130,829,335.94
group
Factoring receivables group 1,174,016.39 -877,560.19 296,456.20
Total 149,013,346.85 -19,420,684.72 -1,533,130.01 131,125,792.14
Among them, significant information of bad debt provision withdrawn or written back in the current period:
None
Bad debt provision for factoring receivables accrued, reversed or recovered during the period
Stage 1 Stage 2 Stage 3
Expected credit loss Expected credit loss
Bad-debt provision Expected credit loss Total
for the entire duration for the entire duration
over the next 12
(credit impairment (credit impairment
months
has not occurred) has occurred)
Opening balance 1,174,016.39 1,174,016.39
Opening balance for the current
period:
- Transferred to Stage 2
- Transferred to Stage 3
- Reversed to Stage 2
- Reversed to Stage 1
Accrual in the current period -877,560.19 -877,560.19
Reversal in the current period
Resale in the current period
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Stage 1 Stage 2 Stage 3
Expected credit loss Expected credit loss
Bad-debt provision Expected credit loss Total
for the entire duration for the entire duration
over the next 12
(credit impairment (credit impairment
months
has not occurred) has occurred)
Written off in the current period
Other changes
Closing balance 296,456.20 296,456.20
(4) Accounts receivable actually written off in current period
None
(5) Accounts receivable and contract assets with the top five closing balances by debtor
Unit: RMB
Closing balance of bad-
Proportion of total
Closing balance of debt provision for
Closing balance of Closing balance closing balance of
Company name accounts receivable accounts receivable and
accounts receivable of contract assets accounts receivable
and contract assets provision for impairment
and contract assets
of contract assets
Company 1 4,034,105,962.28 4,034,105,962.28 32.13% 40,341,059.62
Company 2 2,724,413,747.66 2,724,413,747.66 21.70% 27,244,137.48
Company 3 1,145,816,845.87 1,145,816,845.87 9.13% 11,458,168.46
Company 4 935,170,577.92 935,170,577.92 7.45% 9,351,705.78
Company 5 778,536,665.92 778,536,665.92 6.20% 7,785,366.66
Total 9,618,043,799.65 9,618,043,799.65 76.61% 96,180,438.00
5. Financing receivables
(1) Presentation of receivables financing by category
Unit: RMB
Item Closing balance Opening balance
Notes receivable 9,059,230.11 22,375,874.12
Total 9,059,230.11 22,375,874.12
(2) Disclosure by method of bad debt accrual
Unit: RMB
Closing balance Opening balance
Book balance Bad-debt provision Book balance Bad-debt provision
Category
Proportion Book value Proportion Book value
Amount Proportion Amount Amount Proportion Amount
of accrual of accrual
Bad debts
provision 9,059,230.11 100.00% 9,059,230.11 22,375,874.12 100.00% 22,375,874.12
by group
Including:
Bank 9,059,230.11 100.00% 9,059,230.11 22,375,874.12 100.00% 22,375,874.12
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Closing balance Opening balance
Book balance Bad-debt provision Book balance Bad-debt provision
Category
Proportion Book value Proportion Book value
Amount Proportion Amount Amount Proportion Amount
of accrual of accrual
acceptance
notes
Total 9,059,230.11 100.00% 9,059,230.11 22,375,874.12 100.00% 22,375,874.12
Bad-debt provision by portfolio: Bank acceptance notes
Unit: RMB
Closing balance
Name
Book balance Bad-debt provision Proportion of accrual
Bank acceptance notes 9,059,230.11 0.00%
Total 9,059,230.11
Description for basis of determining the group:
Please see Note V.12. "Impairment of Financial Assets".
Bad-debt provision is made based on the general model of expected credit losses.
None
(3) Accrual, recovery or reversal of bad-debt provisions in the current period
None
(4) Receivables financing pledged by the Company at the end of the period
None
(5) Receivables financing that the Company has endorsed or discounted at the end of the period and is not
yet due at the balance sheet date
Unit: RMB
Item Amount derecognized at the end of the period Amount not derecognized at the end of the period
Notes receivable 1,509,375.671
Total 1,509,375.67
Note: 1 represents bank acceptance notes
(6) Receivables financing actually written off in the current period
None
(7) Changes in receivables financing and fair value in the current period
Please see Section III. VI. 2. "Assets and Liabilities Measured at Fair Value".
(8) Explanation of other matters:
None
6. Other receivables
Unit: RMB
Item Closing balance Opening balance
Other receivables 89,261,417.90 96,442,803.18
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Item Closing balance Opening balance
Total 89,261,417.90 96,442,803.18
(1) Interest receivable
None
(2) Dividends receivable
None
(3) Other receivables
1) Classification of other receivables by nature of payment
Unit: RMB
Nature of payment Closing book balance Opening book balance
Tax refund for export receivable 1,541,663.86
Security deposit 49,771,093.46 56,247,217.13
Current account 14,229,621.87 9,261,136.47
Withholding and remitting social insurance
51,391,844.67 53,852,019.34
and housing provident fund
Other 578,282.97 572,915.09
Total 115,970,842.97 121,474,951.89
2) Disclosed by age of other receivable
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (including 1 year) 80,649,301.96 84,047,670.81
1 to 2 years 10,178,400.76 10,851,113.92
2 to 3 years 5,017,037.63 11,279,658.86
Over 3 years 20,126,102.62 15,296,508.30
3 to 4 years 10,157,378.27 3,010,094.34
4 to 5 years 782,527.91 6,358,648.54
Over 5 years 9,186,196.44 5,927,765.42
Total 115,970,842.97 121,474,951.89
3) Disclosure by method of bad debt accrual
Applicable Not applicable
4) Provision for bad debts
Stage 1 Stage 2 Stage 3
Bad-debt provision Lifetime expected Lifetime expected Total
12-month expected
credit loss (not credit loss (credit
credit loss
credit impaired) impaired)
Opening balance 24,697,356.80 334,791.91 25,032,148.71
Opening balance for the current period:
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Stage 1 Stage 2 Stage 3
Bad-debt provision Lifetime expected Lifetime expected Total
12-month expected
credit loss (not credit loss (credit
credit loss
credit impaired) impaired)
- Transferred to Stage 2
- Transferred to Stage 3 -299,401.17 299,401.17
- Reversed to Stage 2
- Reversed to Stage 1
Accrual in the current period 1,784,803.76 240,814.90 2,025,618.66
Current reversal
Current resale
Amount written off in the current period 375,196.63 375,196.63
Other changes -25,005.68 -1,848.65 -26,854.33
Closing balance 26,207,765.07 501,660.00 26,709,425.07
5) Accrual, recovery or reversal of bad debt reserve in current period
Provision for bad debts of the current period:
Unit: RMB
Changes in amount of the current period
Closing
Category Opening balance recovery or Resale or
Accrual Other balance
reversal write-off
Bad debts provision by group 25,032,148.71 2,025,618.66 375,196.63 -26,854.33 26,709,425.07
Total 25,032,148.71 2,025,618.66 375,196.63 -26,854.33 26,709,425.07
Among them, significant amount in bad debt provision written back or withdrawn in the current period:
None
6) Other receivables actually written off in the current period
Unit: RMB
Item Written off amount
Other receivables actually written off 375,196.63
Among them, write-off of other significant receivables:
None
7) Other receivables of the 5 highest closing balance by debtor
Unit: RMB
Ratio in the total
Closing balance of
Company name Nature of payment Closing balance Aging closing balance of
bad debt provision
other receivables
Withholding and remitting
Company 1 social insurance and 51,391,844.67 Within 1 year 44.31% 513,918.45
housing provident fund
Company 2 Current account 9,574,815.14 Within 1 year 8.26% 95,748.15
Company 3 Deposit 6,254,993.44 Over 3 years 5.39% 6,254,993.44
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Company 4 Deposit 6,152,865.94 Over 3 years 5.31% 6,152,865.94
Company 5 Security deposit 3,000,000.00 1 to 2 years 2.59% 900,000.00
Total 76,374,519.19 65.86% 13,917,525.98
8) Presented in other receivables due to centralized management of funds
None
9) Other receivables involving government grants
None
7. Advances to suppliers
(1) Presentation of advances to suppliers by aging
Unit: RMB
Closing balance Opening balance
Aging
Amount Proportion Amount Proportion
Within 1 year 253,097,169.07 99.40% 50,645,746.34 99.98%
1 to 2 years 850,916.46 0.33% 10,407.09 0.02%
2 to 3 years 605,114.54 0.24%
Over 3 years 80,600.00 0.03%
Total 254,633,800.07 50,656,153.43
Explanation of reasons why advances to suppliers aged more than 1 year with significant amount are not settled in time:
None
(2) Advance payment in the five highest closing balance by seller
Percentage of total balance of prepayment
Company name Book balance
(%)
Company 1 182,216,772.84 71.56
Company 2 11,314,216.62 4.44
Company 3 9,107,519.13 3.58
Company 4 7,455,062.25 2.93
Company 5 5,079,901.43 1.99
Total 215,173,472.27 84.50
8. Inventories
Whether the Company needs to comply with disclosure requirements of real estate industry
No
(1) Inventory classification
Unit: RMB
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Closing balance Opening balance
Inventory Inventory
provision or provision or
Item provision for provision for
Book balance Book value Book balance Book value
impairment of impairment of
contract contract
performance cost performance cost
Raw
5,294,238,418.73 126,412,070.17 5,167,826,348.56 6,446,001,906.31 258,676,409.56 6,187,325,496.75
materials
Products
in 1,175,295,870.64 3,985,092.59 1,171,310,778.05 2,676,387,256.76 565,750,473.85 2,110,636,782.91
progress
Goods in
4,120,631,607.08 82,093,360.33 4,038,538,246.75 8,733,573,211.28 246,557,267.39 8,487,015,943.89
stock
Revolving
417,219,021.06 417,219,021.06 563,692,521.03 563,692,521.03
materials
Total 11,007,384,917.51 212,490,523.09 10,794,894,394.42 18,419,654,895.38 1,070,984,150.80 17,348,670,744.58
(2) Inventory provision or provision for impairment of contract performance cost
Unit: RMB
Increased amount in the Decreased amount in the current
Item Opening balance current period period Closing balance
Accrual Other Write-back or resale Other
Raw materials 258,676,409.56 279,268,684.21 410,931,433.70 601,589.90 126,412,070.17
Products in progress 565,750,473.85 13,898,901.19 575,739,019.04 -74,736.59 3,985,092.59
Goods in stock 246,557,267.39 119,697,494.76 284,501,456.95 -340,055.13 82,093,360.33
Total 1,070,984,150.80 412,865,080.16 1,271,171,909.69 186,798.18 212,490,523.09
Provision for inventory falling price by portfolio
Unit: RMB
End of the period Beginning of the period
Portfolio name Provision
Closing balance Provision Opening balance Provision Provision ratio
ratio
Aging portfolio 8,999,461,128.51 145,516,023.37 1.62% 15,450,873,908.55 145,610,260.60 0.94%
Total 8,999,461,128.51 145,516,023.37 1.62% 15,450,873,908.55 145,610,260.60 0.94%
Criteria for making provision for inventories by portfolio
Please see Note V. 18. (3) for the criteria for making provision for inventories by aging portfolio.
Note: The Company's individual provisions for inventories are as follows: Closing book balance of RMB 2,007,923,789.00, provision
for inventory of RMB 66,974,499.72; Opening book balance of RMB 2,968,780,986.83, provision for inventory of RMB
925,373,890.20.
(3) Explanation of the closing balance of inventory containing the capitalized amount of borrowing costs
The closing balance of inventory contains no capitalized borrowing costs.
(4) Explanation of amortization amount of contract performance cost in current period
None
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9. Current portion of non-current assets
Unit: RMB
Item Closing balance Opening balance
Current portion of non-current assets 494,634,708.33 70,302,566.25
Total 494,634,708.33 70,302,566.25
(1) Debt investments maturing within one year
Applicable Not applicable
(2) Other debt investments maturing within one year
Applicable Not applicable
10. Other current assets
Unit: RMB
Item Closing balance Opening balance
Input tax retained for VAT 330,575,153.58 288,229,492.06
Input tax to be verified and to be deducted 82,547,638.67 74,879,772.45
Advance payment of enterprise income tax 81,283,426.42 152,235,755.00
Other 15,427,845.82 15,646,416.05
Total 509,834,064.49 530,991,435.56
11. Investments in other equity instruments
Unit: RMB
Accumulated
Gains Reasons for
Losses gains Accumulated Dividend
recognized in designation of
recognized in recognized in losses recognized income
other financial assets
Closing other other in other recognized
Name of project Opening balance comprehensi at fair value
balance comprehensive comprehensive comprehensive in the
ve income in through other
income in the income at the income at the end current
the current comprehensive
current period end of the of the period period
period income
period
Investment Non-trading
projects of the 287,540,812.75 399,417,490.79 92,161,581.61 43,034,531.24 equity
Fund Company instrument
Non-trading
Mobvoi Inc. 141,654,000.00 139,292,000.00 equity
instrument
Shenzhen New
Non-trading
Radio
20,000,000.00 20,000,000.00 equity
Technology Co.,
instrument
Ltd.
Nanjing
Xinshijie Non-trading
Microelectronics 50,000,000.00 50,000,000.00 equity
Technology Co., instrument
Ltd.
KOLMOSTAR Non-trading
(CAYMAN) 35,413,500.00 34,823,000.00 equity
LIMITED instrument
EMPOWER 56,661,570.96 55,716,771.45 Non-trading
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Accumulated
Gains Reasons for
Losses gains Accumulated Dividend
recognized in designation of
recognized in recognized in losses recognized income
other financial assets
Closing other other in other recognized
Name of project Opening balance comprehensi at fair value
balance comprehensive comprehensive comprehensive in the
ve income in through other
income in the income at the income at the end current
the current comprehensive
current period end of the of the period period
period income
period
SEMICONDUC equity
TOR, INC. instrument
Total 591,269,883.71 699,249,262.24 92,161,581.61 43,034,531.24
Disclose investments in non-trading equity instruments of the period by item
Unit: RMB
Amount of Reasons for
Reasons for
other other
designation of
Dividend comprehensive comprehensive
Accumulative Accumulative financial assets at fair
Name of project income income income
gains losses value through other
recognized transferred to transferred to
comprehensive
undistributed undistributed
income
profits profits
Investment projects of Non-trading equity
43,034,531.24
the Fund Company instrument
Non-trading equity
Mobvoi Inc.
instrument
Shenzhen New Radio Non-trading equity
Technology Co., Ltd. instrument
Nanjing Xinshijie
Non-trading equity
Microelectronics
instrument
Technology Co., Ltd.
KOLMOSTAR Non-trading equity
(CAYMAN) LIMITED instrument
EMPOWER
Non-trading equity
SEMICONDUCTOR,
instrument
INC.
12. Long-term equity investments
Unit: RMB
Increase or decrease in the current period
Opening Closing
Opening balance balance of Recognized Other Cash Closing balance balance of
Invested entity Investment Investment investment gain comprehensive Other changes dividends Provision for
(book value) provision for Other (book value) impairment
impairment addition reduction and loss under income in equity or profits impairment provision
equity method adjustments declared
I. Joint Venture
II. Affiliated enterprises
Qingdao Virtual
Reality Institute 38,076,721.23 -6,503,389.21 31,573,332.02
Co., Ltd.
Enkris
Semiconductor 130,626,786.73 1,077,993.66 7,069,667.85 138,774,448.24
Inc.
SeeYA
Technology 600,000,000.00 -12,047,708.95 -12,650.40 1,933,461.16 589,873,101.81
Corporation
Uphoton
Technology
192,305,163.87 183,544,068.53 -10,962,893.58 2,201,798.24
(Shaoxing) Co.,
Ltd.
Sub-total 361,008,671.83 600,000,000.00 183,544,068.53 -28,435,998.08 -12,650.40 11,204,927.25 760,220,882.07
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Increase or decrease in the current period
Opening Closing
Opening balance balance of Recognized Other Cash Closing balance balance of
Invested entity Investment Investment investment gain comprehensive Other changes dividends Provision for
(book value) provision for Other (book value) impairment
impairment addition reduction and loss under income in equity or profits impairment provision
equity method adjustments declared
Total 361,008,671.83 600,000,000.00 183,544,068.53 -28,435,998.08 -12,650.40 11,204,927.25 760,220,882.07
The recoverable amount is determined as the net of fair value less disposal expenses.
Applicable Not applicable
The recoverable amount is determined as the present value of the expected future cash flows.
Applicable Not applicable
Other explanations:
Beijing Uphoton Technology Co., Ltd. was renamed Uphoton Technology (Shaoxing) Co., Ltd. in May 2023. The Company acquired
its full equity in November 2023.
13. Other non-current financial assets
Unit: RMB
Item Closing balance Opening balance
Financial assets at fair value through profit and losses 322,640,244.40 318,661,575.31
Total 322,640,244.40 318,661,575.31
14. Fixed assets
Unit: RMB
Item Closing balance Opening balance
Fixed assets 22,305,456,354.63 21,459,756,268.25
Liquidation of fixed assets
Total 22,305,456,354.63 21,459,756,268.25
(1) Overview of fixed assets
Unit: RMB
Production Measuring Transportation
Item Buildings Office equipment Total
equipment equipment equipment
I. Original book
value:
1. Opening
9,846,837,869.96 19,502,022,305.64 2,694,853,713.38 730,219,472.84 24,316,005.03 32,798,249,366.85
balance
2. Amount
increased in current 1,605,156,371.96 2,437,049,233.28 488,975,418.16 21,990,486.03 1,840,065.06 4,555,011,574.49
period
(1) Purchase 672,521,552.22 27,158,764.07 4,605,379.22 1,721,025.59 706,006,721.10
(2) Transfer from
construction in 1,521,769,333.38 1,778,536,972.06 465,602,915.03 16,024,928.78 3,781,934,149.25
progress
(3) Increase in
19,936,589.82 2,009,199.23 134,855.95 22,080,645.00
business combinations
(4) Impact of
difference from
translation of -17,805,144.15 -33,945,880.82 -3,786,260.94 -649,021.20 -15,816.48 -56,202,123.59
statements in foreign
currency
(5) Provisional
101,192,182.73 101,192,182.73
estimate adjustment
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Production Measuring Transportation
Item Buildings Office equipment Total
equipment equipment equipment
3. Amount
decreased in current 9,228,904.70 880,886,558.54 244,454,367.36 54,276,809.81 4,899,367.67 1,193,746,008.08
period
(1) Disposal or
831,003,157.31 185,295,509.03 54,276,809.81 4,899,367.67 1,075,474,843.82
scrapping
(2) Transfer to
construction in 49,883,401.23 59,158,858.33 109,042,259.56
progress
(3) Provisional
9,228,904.70 9,228,904.70
estimate adjustment
4. Closing
11,442,765,337.22 21,058,184,980.38 2,939,374,764.18 697,933,149.06 21,256,702.42 36,159,514,933.26
balance
II. Accumulated
depreciation
1. Opening
1,629,850,461.15 7,682,942,786.21 1,022,137,288.30 406,250,135.41 17,847,505.87 10,759,028,176.94
balance
2. Amount
increased in current 345,167,260.69 2,211,965,785.31 308,223,701.69 97,364,174.76 1,581,012.33 2,964,301,934.78
period
(1) Accrual 346,795,279.98 2,222,972,988.99 309,054,911.52 97,521,991.66 1,587,024.18 2,977,932,196.33
(2) Impact of
difference from
translation of -1,628,019.29 -11,007,203.68 -831,209.83 -157,816.90 -6,011.85 -13,630,261.55
statements in foreign
currency
3. Amount
decreased in current 309,426,696.34 82,126,291.52 33,575,410.39 4,507,498.66 429,635,896.91
period
(1) Disposal or
290,368,772.28 76,107,495.31 33,575,410.39 4,507,498.66 404,559,176.64
scrapping
(2) Transfer to
construction in 19,057,924.06 6,018,796.21 25,076,720.27
progress
4. Closing
1,975,017,721.84 9,585,481,875.18 1,248,234,698.47 470,038,899.78 14,921,019.54 13,293,694,214.81
balance
III. Impairment
provision
1. Opening
568,248,570.99 8,918,010.08 2,298,340.59 579,464,921.66
balance
2. Amount
increased in current
period
(1) Accrual
3. Amount
decreased in current 16,655,500.49 2,067,172.65 377,884.70 19,100,557.84
period
(1) Disposal or
16,655,500.49 2,067,172.65 377,884.70 19,100,557.84
scrapping
4. Closing
551,593,070.50 6,850,837.43 1,920,455.89 560,364,363.82
balance
IV. Book value
1.Closing book
9,467,747,615.38 10,921,110,034.70 1,684,289,228.28 225,973,793.39 6,335,682.88 22,305,456,354.63
value
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Production Measuring Transportation
Item Buildings Office equipment Total
equipment equipment equipment
2. Opening book
8,216,987,408.81 11,250,830,948.44 1,663,798,415.00 321,670,996.84 6,468,499.16 21,459,756,268.25
value
(2) Fixed assets temporarily idle
Unit: RMB
Accumulated
Item Original book value Impairment provision Book value Notes
depreciation
Buildings 371,765,001.33 90,786,632.42 280,978,368.91
Production equipment 2,043,229,312.29 431,214,331.98 535,805,477.57 1,076,209,502.74
Measuring equipment 15,240,800.52 2,895,227.79 1,478,628.28 10,866,944.45
Office equipment 20,701,208.67 9,922,992.91 1,513,336.37 9,264,879.39
Total 2,450,936,322.81 534,819,185.10 538,797,442.22 1,377,319,695.49
(3) Fixed assets leased out through operating leases
Unit: RMB
Item Closing book value
Buildings 216,922,724.32
Production equipment and other equipment 315,288,605.04
Total 532,211,329.36
(4) Overview of the fixed assets for which certificates of title to be obtained
Unit: RMB
Item Book value Reasons for not obtaining the certificate of title
9# Factory building 138,197,532.71 Property rights certificate under processing
52# Apartment 179,298,857.57 Property rights certificate under processing
23# Apartment 2,487,035.33 Property rights certificate under processing
65# Factory building 64,551,575.38 Property rights certificate under processing
66# Factory building 64,502,857.03 Property rights certificate under processing
Total 449,037,858.02
(5) Liquidation of fixed assets
None
15. Construction in progress
Unit: RMB
Item Closing balance Opening balance
Construction in progress 2,014,541,273.09 2,276,965,736.33
Construction materials 56,739,070.46 147,478,039.00
Total 2,071,280,343.55 2,424,443,775.33
(1) Overview of construction in progress
Unit: RMB
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Closing balance Opening balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Self-made
445,893,021.27 445,893,021.27 239,378,426.17 239,378,426.17
equipment
Unaccepted
407,651,208.82 407,651,208.82 530,677,599.03 530,677,599.03
equipment
Infrastructure
94,544,059.28 94,544,059.28 147,355,671.17 147,355,671.17
construction
Sporadic projects 92,050,448.89 92,050,448.89 183,389,745.14 183,389,745.14
B4 Factory
90,019,857.17 90,019,857.17
building
B3 Factory
87,367,915.53 87,367,915.53
building
A7 Factory
82,278,754.04 82,278,754.04
building
A8 Factory
81,270,534.70 81,270,534.70
building
C8 Factory
73,918,047.41 73,918,047.41
building
80# Factory
70,498,165.12 70,498,165.12 5,762,284.64 5,762,284.64
building
A5 Factory
69,865,450.61 69,865,450.61
building
B5 Factory
69,399,452.46 69,399,452.46
building
A1 Power center 61,274,301.68 61,274,301.68
A6 Factory
59,116,843.41 59,116,843.41
building
A2 Carport 52,070,864.72 52,070,864.72
C7 Factory
49,204,958.23 49,204,958.23
building
83# Factory
47,193,044.87 47,193,044.87
building
A3 Factory
45,591,287.12 45,591,287.12
building
5# Office building 16,549,975.01 16,549,975.01
C Power center 12,648,040.32 12,648,040.32
78# Factory
5,870,826.50 5,870,826.50 4,873,511.68 4,873,511.68
building
79# Factory
264,215.93 264,215.93 90,592.49 90,592.49
building
71# Factory
18,649,051.46 18,649,051.46
building
2# Office building 287,041,263.11 287,041,263.11
63# Factory
158,512,473.50 158,512,473.50
building
39# Factory 111,488,614.81 111,488,614.81
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Closing balance Opening balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
building
74# Factory
64,820,307.60 64,820,307.60
building
64# Factory
59,007,078.74 59,007,078.74
building
75# Factory
57,780,367.36 57,780,367.36
building
76# Factory
54,322,988.22 54,322,988.22
building
65# Factory
37,794,076.56 37,794,076.56
building
66# Factory
37,772,311.18 37,772,311.18
building
68# Factory
34,968,643.25 34,968,643.25
building
69# Factory
34,606,945.61 34,606,945.61
building
73# Factory
34,217,551.92 34,217,551.92
building
77# Factory
26,720,487.51 26,720,487.51
building
Reconstruction
and expansion of 10,924,075.53 10,924,075.53
factory buildings
70# Factory
21,058,712.36 21,058,712.36
building
67# Factory
36,939,485.41 36,939,485.41
building
72# Factory
78,813,471.88 78,813,471.88
building
2,276,965,736.
Total 2,014,541,273.091 2,014,541,273.09 2,276,965,736.33
33
Note: 1 The construction in progress during the current period increased by RMB 129,304,411.07 due to business combination,
corresponding to the closing balance of RMB 132,441,234.67.
(2) Increase or decrease of significant construction in progress in current period
Unit: RMB
170
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Amount Including:
Other Proportion Interest
transferred Accumulated Amount of
Increased amount of total capitalization Source
Name of Opening to fixed Closing Project amount of interest
Budget amount amount in the decreased in project rate for of
project balance assets in balance progress interest capitalization
current period current input to current funds
current capitalization in current
period budget period
period period
B4 Factory
139,809,600.00 91,253,005.90 1,233,148.73 90,019,857.17 64.39% 70.00% Other
building
B3 Factory
119,543,340.00 88,564,736.29 1,196,820.76 87,367,915.53 73.08% 80.00% Other
building
A7 Factory
139,809,600.00 83,405,860.26 1,127,106.22 82,278,754.04 58.85% 70.00% Other
building
A8 Factory
139,809,600.00 82,383,829.70 1,113,295.00 81,270,534.70 58.13% 70.00% Other
building
C8 Factory
119,543,340.00 74,930,623.40 1,012,575.99 73,918,047.41 61.83% 70.00% Other
building
80# Factory
187,000,000.00 5,762,284.64 64,735,880.48 70,498,165.12 37.70% 30.00% Other
building
A5 Factory
119,543,340.00 70,822,511.58 957,060.97 69,865,450.61 58.44% 70.00% Other
building
B5 Factory
119,543,340.00 70,350,129.89 950,677.43 69,399,452.46 58.05% 70.00% Other
building
A2 Carport 127,484,280.00 52,784,164.24 713,299.52 52,070,864.72 40.84% 50.00% Other
Total 1,212,086,440.00 5,762,284.64 679,230,741.74 8,303,984.62 676,689,041.76
(3) Provision for impairment of construction in progress in current period
None
(4) Impairment testing of construction in progress
Applicable Not applicable
(5) Construction materials
Unit: RMB
Closing balance Opening balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Construction
56,739,070.46 56,739,070.46 147,478,039.00 147,478,039.00
materials
Total 56,739,070.46 56,739,070.46 147,478,039.00 147,478,039.00
16. Bearer biological assets
(1) Bearer biological assets measured at cost
Applicable Not applicable
(2) Impairment test for bearer biological assets measured at cost
Applicable Not applicable
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(3) Bearer biological assets measured at fair value
Applicable Not applicable
17. Oil and gas assets
Applicable Not applicable
18. Right-of-use assets
(1) Right-of-use assets
Unit: RMB
Item Buildings Other Total
I. Original book value
1. Opening balance 795,474,434.63 795,474,434.63
2. Amount increased in current period 173,065,005.09 229,830.81 173,294,835.90
(1) New leases in the current period 173,294,486.32 173,294,486.32
(2) Business combination 2,045,389.59 229,830.81 2,275,220.40
(3) Impact of difference from translation
-2,274,870.82 -2,274,870.82
of statements in foreign currency
3. Amount decreased in current period 87,578,314.32 87,578,314.32
(1) Disposal 87,578,314.32 87,578,314.32
(2) Others
4. Closing balance 880,961,125.40 229,830.81 881,190,956.21
II. Accumulated depreciation
1. Opening balance 215,298,511.90 215,298,511.90
2. Amount increased in current period 128,312,643.91 4,014.51 128,316,658.42
(1) Accrual 129,550,209.76 4,014.51 129,554,224.27
(2) Impact of difference from translation
-1,237,565.85 -1,237,565.85
of statements in foreign currency
3. Amount decreased in current period 77,856,064.02 77,856,064.02
(1) Disposal 77,856,064.02 77,856,064.02
(2) Others
4. Closing balance 265,755,091.79 4,014.51 265,759,106.30
III. Impairment provision
1. Opening balance
2. Amount increased in current period
(1) Accrual
3. Amount decreased in current period
(1) Disposal
4. Closing balance
IV. Book value
1.Closing book value 615,206,033.61 225,816.30 615,431,849.91
2. Opening book value 580,175,922.73 580,175,922.73
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(2) Impairment test of right-of-use assets
Applicable Not applicable
19. Intangible assets
(1) Overview of intangible assets
Unit: RMB
Non-patent
Item Land-use right Patent right Software Trade mark Total
technology
I. Original book value
1. Opening
1,571,927,427.61 8,964,410.00 3,566,513,741.73 271,462,621.56 5,418,868,200.90
balance
2. Amount
increased in current 587,797,846.19 138,000,000.00 457,162,678.29 75,264,505.31 76,000,000.00 1,334,225,029.79
period
(1) Purchase 536,000,791.36 73,773,612.34 609,774,403.70
(2) Internal R&D 457,162,678.29 457,162,678.29
(3) Increase in business
62,026,800.00 138,000,000.00 1,442,792.12 76,000,000.00 277,469,592.12
combinations
(4) Impact of
difference from
translation of -10,229,745.17 48,100.85 -10,181,644.32
statements in foreign
currency
3. Amount
decreased in current 157,012,868.28 3,658,774.16 160,671,642.44
period
(1) Disposal 157,012,868.28 3,658,774.16 160,671,642.44
4. Closing balance 2,159,725,273.80 146,964,410.00 3,866,663,551.74 343,068,352.71 76,000,000.00 6,592,421,588.25
II. Accumulated
amortization
1. Opening
204,881,055.54 3,735,170.83 2,316,871,264.20 172,587,039.65 2,698,074,530.22
balance
2. Amount
increased in current 41,454,378.62 2,539,298.14 688,964,311.28 40,723,021.35 1,266,666.67 774,947,676.06
period
(1) Accrual 41,906,844.38 2,539,298.14 688,964,311.28 40,681,289.74 1,266,666.67 775,358,410.21
(2) Impact of
difference from
translation of -452,465.76 41,731.61 -410,734.15
statements in foreign
currency
3. Amount
decreased in current 157,012,868.28 3,658,774.16 160,671,642.44
period
(1) Disposal 157,012,868.28 3,658,774.16 160,671,642.44
4. Closing balance 246,335,434.16 6,274,468.97 2,848,822,707.20 209,651,286.84 1,266,666.67 3,312,350,563.84
III. Impairment
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Non-patent
Item Land-use right Patent right Software Trade mark Total
technology
provision
1. Opening
balance
2. Amount
increased in current
period
(1) Accrual
3. Amount
decreased in current
period
(1) Disposal
4. Closing balance
IV. Book value
1.Closing book
1,913,389,839.64 140,689,941.03 1,017,840,844.54 133,417,065.87 74,733,333.33 3,280,071,024.41
value
2. Opening book
1,367,046,372.07 5,229,239.17 1,249,642,477.53 98,875,581.91 2,720,793,670.68
value
At the end of this period, the proportion of intangible assets created through internal research and development of the Company to the
balance of intangible assets is 53.22%.
(2) Overview of land-use right without certificates of title
None
(3) Impairment testing of intangible assets
Applicable Not applicable
20. Development costs
Unit: RMB
Increase in the current period Decrease in the current period
Internal Increase in Transfer to Closing
Items Opening balance Recognized as
development business current profit balance
intangible assets
costs combination and loss
Self-developed
technologies for
361,178,111.91 542,789,272.24 457,162,678.29 446,804,705.86
electroacoustic
products
21. Goodwill
(1) Original book value of goodwill
Unit: RMB
Increase in the current period Decrease in the current period
Name of the invested
Opening Formed by
entity or matter Closing balance
balance business Other Disposal Other
forming goodwill
combinations
174
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Goertek Electronics,
1,743,540.56 1,743,540.56
Inc.
Weifang Goertek
Communication 15,115,644.52 15,115,644.52
Technology Co., Ltd.
Goertek Europe ApS 8,831,473.29 8,831,473.29
Uphoton Technology
588,174,794.48 588,174,794.48
(Shaoxing) Co., Ltd.
Total 25,690,658.37 588,174,794.48 613,865,452.85
(2) Impairment provision for goodwill
Unit: RMB
Name of the invested Increase in the current period Decrease in the current period
Closing
entity or matter forming Opening balance
Accrual Other Disposal Other balance
goodwill
Goertek Europe ApS 8,831,473.29 8,831,473.29
Total 8,831,473.29 8,831,473.29
(3) Information about the asset group or combination of asset groups of goodwill
Composition and basis of the asset Consistent with prior
Name Operating segment and basis
group or combination of asset groups years or not
This includes long-term assets related
to system business operations in For internal management
Uphoton Technology
Uphoton Technology (Shaoxing) Co., purposes, this asset group falls
(Shaoxing) Co., Ltd. System Not applicable
Ltd., which generate cash inflows under the Precision Components
Business
largely independent of those generated business.
by other assets or asset groups.
This includes long-term assets related
to components business operations in For internal management
Uphoton Technology
Uphoton Technology (Shaoxing) Co., purposes, this asset group falls
(Shaoxing) Co., Ltd. - Not applicable
Ltd., which generate cash inflows under the Precision Components
Components Business
largely independent of those generated business.
by other assets or asset groups
Other explanations
The composition of the asset group or portfolio of asset groups of significant goodwill:
Uphoton Technology (Shaoxing) Uphoton Technology (Shaoxing)
Composition of the asset group or combination of asset
Co., Ltd. - System business Co., Ltd. - Components business
groups
(RMB) (RMB)
Book value of the asset group or combination of asset
61,640,450.89 175,438,206.36
groups
Book value of goodwill apportioned to the asset group
152,925,446.56 435,249,347.92
or combination of asset groups
Book value of the asset group or combination of asset
214,565,897.45 610,687,554.28
groups containing goodwill
Note: Method of apportioning goodwill to this asset group or portfolio of asset groups: The apportionment is based on the proportion
of the fair value of each asset group or combination of asset groups to the total fair value of the relevant asset group or combination of
asset groups.
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(4) Specific method for determining the recoverable amount
The recoverable amount is determined as the net of fair value less disposal expenses.
Applicable Not applicable
The recoverable amount is determined as the present value of the expected future cash flows.
Applicable Not applicable
Unit: RMB
Basis for
determining
Key parameters Key parameters
key
Recoverable Impairment Projection for the for the
Item Book value parameters
amount amount period projection stabilization
for the
period period
stabilization
period
Based on the
Revenue past
Uphoton
growth rate Revenue growth performance
Technology
11.48% - rate 0%; of the asset
(Shaoxing) Co., 214,565,897.45 236,091,100.00 2024-2031
193.10%; discount rate group and
Ltd. System
discount rate 13.55% projections
Business
13.55% for market
expectations
Based on the
Uphoton Revenue past
Technology growth rate Revenue growth performance
(Shaoxing) Co., 9.86% - rate 0%; of the asset
610,687,554.28 678,498,100.00 2024-2031
Ltd. - 198.19%; discount rate group and
Components discount rate 13.55% projections
Business 13.55% for market
expectations
Total 825,253,451.73 914,589,200.00
Reasons for apparent discrepancies between the foregoing information and information used for impairment testing in prior years or
external information
None
Reasons for apparent discrepancies between the information used in the Company's impairment tests in prior years and the actual
situation in the current year
None
(5) Fulfillment of performance commitments and corresponding impairment of goodwill
Performance commitments existed at the time goodwill was formed and are within the performance commitment period for the
reporting period or the preceding period of the reporting period.
Applicable Not applicable
22. Long-term prepaid expenses
Unit: RMB
Increased amount in Amortized amount Other decreased
Item Opening balance Closing balance
the current period in the current period amount
Expenditure on house
303,437,303.26 272,537,509.29 201,617,256.13 7,380,279.88 366,977,276.54
improvement
176
Full Text of Goertek Inc. Annual Report 2023
IT project service fee 27,084,151.68 25,778,938.11 18,995,011.85 33,868,077.94
Design fee 6,787,569.12 2,406,540.12 4,381,029.00
Financing guarantee fee 252,500.00 9,000,000.00 3,002,500.00 6,250,000.00
Other 618,693.92 48,417.73 570,276.19
Total 337,561,524.06 307,935,141.32 226,069,725.83 7,380,279.88 412,046,659.67
Other explanations:
Other decreases in expenditures for house improvements in the current period were primarily due to adjustments made by the Company
based on final settlement amounts.
23. Deferred tax assets/liabilities
(1) Deferred tax assets not offset
Unit: RMB
Closing balance Opening balance
Item Deductible temporary Deductible temporary
Deferred tax assets Deferred tax assets
difference difference
Provision for impairment
187,791,490.61 29,792,145.97 1,714,479,986.93 259,912,213.28
of assets
Unrealized profit from
1,131,161,206.27 188,180,881.90 1,106,784,542.91 182,217,984.94
intra-group transactions
Deductible loss 7,949,926,507.37 1,253,526,618.03 4,978,155,153.32 825,412,239.76
Government grants 123,854,596.87 20,310,571.81 303,540,279.67 47,040,683.06
Financial assets held for
trading - changes in fair 52,130,372.98 7,819,555.95
value of equity instrument
Changes in the fair value
of derivative financial 97,304,476.36 15,034,908.60 182,318,270.45 29,492,906.86
instruments
Temporary differences of
38,356,112.38 5,753,416.86 42,335,704.66 6,350,355.70
fixed assets
Expenses of share-based
75,231,226.39 11,284,683.96
payment
Lease liabilities 630,560,463.73 96,756,559.56 590,093,259.12 92,196,126.96
Total 10,158,954,853.59 1,609,355,102.73 9,045,068,796.43 1,461,726,750.47
(2) Deferred tax liabilities not offset
Unit: RMB
Closing balance Opening balance
Item Taxable temporary Taxable temporary
Deferred tax liabilities Deferred tax liabilities
difference difference
Asset appreciation after
business combination not
251,185,339.82 41,487,520.22 4,126,637.34 1,031,659.32
involving enterprises
under common control
Changes in the fair value
of derivative financial 104,229,894.43 17,197,932.59 185,939,899.60 27,939,770.90
instruments
Difference in time point 5,935,766.66 1,483,941.67 5,039,047.50 1,259,761.87
177
Full Text of Goertek Inc. Annual Report 2023
Closing balance Opening balance
Item Taxable temporary Taxable temporary
Deferred tax liabilities Deferred tax liabilities
difference difference
for recognition of interest
income of factoring
business
Difference between the
book value of fixed assets 3,454,994,983.11 596,025,479.50 4,664,457,309.75 783,266,986.21
and their tax bases
Financial assets held for
trading - changes in fair 47,858,392.97 7,178,758.95 17,469,694.02 2,620,454.10
value of equity instrument
Right-of-use assets 615,431,849.91 94,606,542.41 580,175,922.73 90,419,197.04
Total 4,479,636,226.90 757,980,175.34 5,457,208,510.94 906,537,829.44
(3) Deferred tax assets or liabilities presented in net amount after offsetting
Unit: RMB
Amount of deferred tax Amount of deferred tax Opening balance of
Closing balance of
assets and liabilities assets and liabilities deferred tax assets or
Item deferred tax assets or
mutually offset at the mutually offset at the liabilities after
liabilities after offsetting
end of the period beginning of the period offsetting
Deferred tax assets 1,609,355,102.73 1,461,726,750.47
Deferred tax liabilities 757,980,175.34 906,537,829.44
(4) Details of unrecognized deferred tax assets
Unit: RMB
Item Closing balance Opening balance
Deductible temporary difference 1,368,219,823.12 108,002,751.78
Deductible loss 987,684,531.31 1,113,018,229.33
Government grants 201,469,460.92 8,950,659.40
Unrealized profit from intra-group
355,291,930.95 228,644,722.04
transaction
Lease liabilities 14,603,113.98 8,300,246.38
Total 2,927,268,860.28 1,466,916,608.93
(5) Deductible loss of unrecognized deferred tax assets will expire in the following years
Unit: RMB
Year Closing balance Opening balance Notes
2023 42,489,136.50
2024 18,696,741.06 55,578,667.67
2025 55,803,979.86 115,720,117.70
2026 100,932,581.25 129,251,092.62
2027 132,003,790.64 104,866,432.82
2028 226,015,025.30 44,300,430.49
2029 34,117,796.46 84,671,122.89
2030 40,430,198.27 131,354,916.79
2031 163,633,635.10 215,711,939.66
178
Full Text of Goertek Inc. Annual Report 2023
2032 164,201,128.77 189,074,372.19
2033 51,849,654.60
Total 987,684,531.31 1,113,018,229.33
24. Other non-current assets
Unit: RMB
Closing balance Opening balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Contract assets 119,469.27 1,194.69 118,274.58
Prepayment for
150,258,931.39 150,258,931.39 269,755,356.88 269,755,356.88
long-term assets
Certificates of
deposits issued by 998,012,152.77 998,012,152.77 655,000,458.30 655,000,458.30
banks
Guarantee
30,000,000.00 30,000,000.00
deposits
Prepaid long-term
borrowings 101,102,677.91 101,102,677.91
financing costs
Equity investment
8,461,633.81 8,461,633.81
transfer receivable
The portion due
within one year -494,634,708.33 -494,634,708.33 -70,303,760.94 -1,194.69 -70,302,566.25
(Note VII. 9)
Total 683,636,375.83 683,636,375.83 964,135,835.23 964,135,835.23
25. Assets with restricted ownership or right to use
Unit: RMB
End of the period Beginning of the period
Item Restriction Restriction Restriction Restriction
Book balance Book value Book balance Book value
type description type description
Cash at bank Handling of Handling of
1,456,289,098.94 1,456,289,098.94 Pledged 1,392,748,538.84 1,392,748,538.84 Pledged
and on hand notes, loans, etc. notes, loans, etc.
Notes Bill pledge,
100,866,907.03 100,866,907.03 Pledged 5,848,815.01 5,848,815.01 Pledged Bill pledge
receivable discount, etc.
Used for
Intangible
61,897,657.63 61,897,657.63 Collateral mortgage
assets
purposes
Current
Bank-issued
portion of Bank-issued
453,106,027.78 453,106,027.78 Pledged financing 70,184,291.67 70,184,291.67 Pledged
non-current financing
Guarantee
assets guarantees, bills,
deposits, bills,
Other non- etc.
533,377,444.44 533,377,444.44 Pledged etc. 544,796,722.20 544,796,722.20 Pledged
current assets
Total 2,605,537,135.82 2,605,537,135.82 2,013,578,367.72 2,013,578,367.72
26. Short-term borrowings
(1) Types of short-term borrowings
Unit: RMB
179
Full Text of Goertek Inc. Annual Report 2023
Item Closing balance Opening balance
Secured borrowings 191,949,621.83 508,878,860.80
Credit borrowings 4,922,541,694.79 6,611,967,165.87
Discounted borrowing 100,000,000.00
Total 5,214,491,316.62 7,120,846,026.67
Explanation of the types of short-term borrowings:
The balance of secured borrowings at the end of the period amounted to RMB191,949,621.83 (principal of RMB191,232,900.00 and
interest of RMB716,721.83), which was guaranteed by Goertek Group Co., Ltd.
(2) Short-term borrowings that are overdue and not repaid
None
27. Financial liabilities held for trading
Unit: RMB
Item Closing balance Opening balance
Financial liabilities held for trading 129,579,785.95 202,293,742.46
Including:
Derivative financial liabilities 129,579,785.95 202,293,742.46
Total 129,579,785.95 202,293,742.46
28. Notes payable
Unit: RMB
Type Closing balance Opening balance
Commercial acceptance notes 30,000,000.00 170,000,000.00
Bank acceptance notes 4,223,514,820.18 4,269,924,397.04
Domestic letter of credit 284,839,800.50 410,573,849.04
Total 4,538,354,620.68 4,850,498,246.08
The amount of notes payable due and unpaid at the end of this period is RMB 0.00.
29. Accounts Payable
(1) Presentation of accounts payable
Unit: RMB
Item Closing balance Opening balance
Material cost and others 16,626,231,694.18 23,460,996,615.58
Payment for equipment 234,749,834.37 1,794,480,008.06
Payment for construction projects 721,281,830.62 493,281,646.55
Total 17,582,263,359.17 25,748,758,270.19
(2) Important accounts payable aged over one year or overdue
None
30. Other payables
Unit: RMB
Item Closing balance Opening balance
180
Full Text of Goertek Inc. Annual Report 2023
Other payables 87,474,942.48 78,974,306.79
Total 87,474,942.48 78,974,306.79
(1) Interest payable
None
(2) Dividends payable
None
(3) Other payables
1) Presentation of other payables by nature of payment
Unit: RMB
Item Closing balance Opening balance
Current accounts payable 30,601,293.49 19,961,968.64
Employee benefits payable 2,959,471.15 3,334,897.96
Deposits and security deposits payable 53,914,177.84 55,677,440.19
Total 87,474,942.48 78,974,306.79
2) Important other payables with aging over one year or overdue
None
31. Contract liabilities
Unit: RMB
Item Closing balance Opening balance
Advance payment received for products 3,472,638,215.20 2,295,347,547.31
Total 3,472,638,215.20 2,295,347,547.31
Important contract liabilities with aging over one year
None
Amount and causes of significant changes in book value during the reporting period
None
32. Employee benefits payable
(1) Presentation of employee benefits payable to employees
Unit: RMB
Increase in the Decrease in the
Item Opening balance Closing balance
current period current period
I. Short-term payroll 999,017,864.86 8,515,882,608.64 8,300,010,277.01 1,214,890,196.49
II. Post-employment benefits—
676,271,041.48 676,090,643.92 180,397.56
defined contribution plans
II. Termination benefits 40,553,913.53 144,863,803.36 180,942,770.29 4,474,946.60
Total 1,039,571,778.39 9,337,017,453.48 9,157,043,691.22 1,219,545,540.65
(2) Presentation of short-term payroll
Unit: RMB
181
Full Text of Goertek Inc. Annual Report 2023
Increase in the Decrease in the
Item Opening balance Closing balance
current period current period
1. Salaries, bonuses, allowances
984,016,293.41 7,511,709,457.94 7,288,410,368.68 1,207,315,382.67
and subsidies
2. Employee welfare fee 425,130,211.82 425,130,211.82
3. Social insurance premium 112,235.72 309,226,236.55 309,224,908.60 113,563.67
Incl.: Medical insurance
77,449.20 287,594,427.77 287,567,981.59 103,895.38
premium
Work injury
19,864,037.70 19,856,638.63 7,399.07
insurance premium
Maternity insurance
34,786.52 1,767,771.08 1,800,288.38 2,269.22
premium
4. Housing provident fund 246,638,584.30 246,608,284.30 30,300.00
5. Labor union expenditure and
14,889,335.73 23,178,118.03 30,636,503.61 7,430,950.15
employee education expenses
Total 999,017,864.86 8,515,882,608.64 8,300,010,277.01 1,214,890,196.49
(3) Presentation of defined contribution plans
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
1. Basic endowment insurance
647,818,393.48 647,644,021.14 174,372.34
premium
2. Unemployment insurance
28,452,648.00 28,446,622.78 6,025.22
premium
Total 676,271,041.48 676,090,643.92 180,397.56
Other explanations:
The Group contributes to mandatory pension program and unemployment benefit programs established by government authority. Under
these programs, the Group makes monthly contributions to these programs at certain percentages according to the social insurance
contribution base for 2023. Except the above monthly contributions, the Group is not under other payment obligations. Corresponding
expenditures are recorded in the current gains and losses, or related asset costs when incurred.
33. Taxes payable
Unit: RMB
Item Closing balance Opening balance
VAT 20,391,817.39 38,043,970.81
Enterprise income tax 29,601,348.32 174,981,926.24
Personal income tax 13,907,551.43 11,883,118.28
City maintenance and construction tax 4,043,865.01 10,809,326.00
Education surcharge 816,335.64 3,269,592.35
Local education surcharges 732,968.31 3,106,645.36
Housing property tax 22,511,435.33 19,768,868.36
Land use tax 6,287,778.70 2,934,841.41
Stamp duties tax 21,505,223.06 20,091,251.59
Water resource tax 48.00
Environmental protection tax 14,105.18 22,179.18
182
Full Text of Goertek Inc. Annual Report 2023
Item Closing balance Opening balance
Withholding tax 1,043,625.65
Total 120,856,054.02 284,911,767.58
34. Current portion of non-current liabilities
Unit: RMB
Item Closing balance Opening balance
Long-term borrowings due within one year (Note VII, 36) 945,537,351.58 992,791,555.56
Lease liabilities due within one year (Notes VII, 37) 126,507,675.26 102,826,772.18
Long-term employee benefits payable due within one year 124,233.89
Total 1,072,169,260.73 1,095,618,327.74
Other explanations:
Long-term employee benefits payable due within one year represents the non-competition compensation payable to departed employees
of the subsidiary, Uphoton Technology (Shaoxing) Co., Ltd.
35. Other current liabilities
Unit: RMB
Item Closing balance Opening balance
VAT payable—tax on items to be resold 4,718,260.10 4,252,178.60
Total 4,718,260.10 4,252,178.60
Change in short-term debentures payable:
None
36. Long-term borrowings
(1) Types of long-term borrowings
Unit: RMB
Item Closing balance Opening balance
Mortgage borrowings 150,213,125.00
Secured borrowings 3,269,566,929.13 1,100,982,361.11
Credit borrowings 4,157,228,049.31 2,097,809,194.45
Long-term borrowings due within one year (Note VII, 34) -945,537,351.58 -992,791,555.56
Total 6,631,470,751.86 2,206,000,000.00
Description of types of long-term borrowings:
The balance of secured borrowings at the end of the period was RMB 3,269,566,929.13 (principal of RMB 3,293,607,500.00 and
interest adjustment of RMB -24,040,570.87), of which the principal of RMB 1,700,000,000.00 was guaranteed by Goertek Group Co.,
Ltd. and RMB 1,593,607,500.00 was guaranteed by the Company for its subsidiary.
Other explanations, including interest rate range:
The interest rate range for long-term borrowings on December 31, 2023 was 2.40% - 7.21% (December 31, 2022: 2.65% - 3.7%).
37. Lease liabilities
Unit: RMB
Item Closing balance Opening balance
Lease payment 718,922,935.00 639,092,280.68
Plus: Unrecognized financing fees -74,255,700.11 -65,561,000.75
183
Full Text of Goertek Inc. Annual Report 2023
Lease liabilities due within one year (Notes VII, 34) -126,507,675.26 -102,826,772.18
Total 518,159,559.63 470,704,507.75
38. Deferred income
Unit: RMB
Increase in the Decrease in the Cause of
Item Opening balance Closing balance
current period current period formation
Please see Note
XI. "Government
Government grants 532,374,144.38 78,520,570.00 91,810,056.04 519,084,658.34
Grants" for more
details.
Total 532,374,144.38 78,520,570.00 91,810,056.04 519,084,658.34 -
39. Other non-current liabilities
Unit: RMB
Item Closing balance Opening balance
Equity of other partners of the fund company 348,058,624.72 172,261,037.39
Total 348,058,624.72 172,261,037.39
40. Share capital
Unit: RMB
Increase or decrease in the change (+, -)
Opening balance Transferred Closing balance
New shares Bonus shares Other Sub-total
from reserves
Total shares 3,420,403,200.00 3,420,403,200.00
Other explanations:
As of December 31, 2023, the 65,000,000 shares of the Company held by the controlling shareholders and their persons acting in
concert have been pledged, representing 1.90% of total shares of the Company. Specifically, Mr. Jiang Long, a shareholder of the
Company, pledged 65,000,000 shares of the Company in his possession to China Merchants Securities Asset Management Company
Limited for the period from June 1, 2023 to June 1, 2024.
41. Capital surplus
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
Capital premium (Share
9,444,850,530.59 285,989,624.44 1,686,106,939.05 8,044,733,215.98
capital premium)
Other capital surplus 835,808,720.44 182,565,014.67 64,734,580.48 953,639,154.63
Total 10,280,659,251.03 468,554,639.11 1,750,841,519.53 8,998,372,370.61
Other explanations, including the increase and decrease in the current period and explanation of reasons for changes:
① Capital surplus - Share capital premium increased by RMB 285,989,624.44 this year. Reasons: a.The release of the employee
stock ownership plan and the exercise of stock options resulting in the conversion of other capital surplus to share capital premium
of RMB 62,532,782.24, b The granting of the Company's "Home No. 5" Employee Stock Ownership Plan, where the actual
released shares were less than the target due to individual performance evaluation, resulting in an increase in capital surplus -
share capital premium of RMB 39,355,486.02 due to the sale price of the corresponding shares; c The change in shareholding
ratio as a result of contribution by minority shareholders of subsidiaries, increasing the share capital premium by
184
Full Text of Goertek Inc. Annual Report 2023
RMB184,101,356.18. Please see Note X.2. "The Share of Owner's Equity in the Subsidiary Has Changed and Still Controls the
Transactions of the Subsidiary".
② Capital surplus - Share capital premium decreased by RMB 1,686,106,939.05 this year, as a result of the non-trading transfer of
the Company's shares in the Company's special securities repurchase account for repurchase to the special account of the
Company's "Home 6" and "Home 7" Employee Stock Ownership Plan at a price lower than the cost of repurchase.
③ Capital surplus - other capital surplus increased by RMB 182,565,014.67 this year. Reasons: a.The share-based payment resulting
in RMB 172,286,003.87, b The effect of changes in other owners' equity of invested units under the equity method, which
increased by RMB 10,279,010.80.
④ Capital surplus - other capital surplus decreased by RMB 64,734,580.48 this year. Reasons: a. As the employee stock ownership
plan has reached the release stage and the stock options has entered exercise period, a capital surplus of RMB 62,532,782.24 is
transferred to share capital premium; b.The disposal of affiliated companies this year, with RMB 2,201,798.24 of other capital
surplus recognized transferred out under the equity method upon the time of disposal.
42. Treasury stock
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
Shares of the Company
repurchased for employee stock
2,291,973,146.75 177,655,190.77 2,191,097,591.05 278,530,746.47
programs or stock option
incentives
Total 2,291,973,146.75 177,655,190.77 2,191,097,591.05 278,530,746.47
Other explanations, including the increase and decrease in the current period and explanation of reasons for changes:
As of December 31, 2023, there were cumulatively 12,901,311.00 treasury stock, representing 0.38% of the total share capital of the
Company.
(1) Repurchase of treasury stock in the current period
The Company held the Tenth Meeting of the Sixth Session of the Board of Directors on October 26, 2023, during which the Board
deliberated and approved the Proposal on the Repurchase of the Company's Shares by means of Centralized Bidding, among others. It
agreed that the Company would repurchase its shares by means of centralized bidding trading for the Employee Stock Ownership Plan
or the Stock Option Incentive Plan at a price of not more than RMB25.49/share, and that the total amount of the funds to be used for
the repurchase wouldn't be less than RMB 500 million and not more than RMB 700 million, with an implementation period of 12
months from the date of the approval of this repurchase by the Board. As of December 31, 2023, a total of 9,632,700.00 shares of the
Company had been repurchased under this share repurchase proposal.
(2) Transfer of treasury stock in the current period
67,338,040 shares in the Company's specific securities repurchase account for repurchase were transferred to the special account related
to the Company's "Home No. 6" Employee Stock Ownership Plan at RMB 7 per share on a non-trading basis, and 3,658,800 shares in
the Company's specific securities repurchase account for repurchase were transferred to the special account related to the Company's
"Home No. 7" Employee Stock Ownership Plan at RMB 9.19 per share on a non-trading basis, all of which received the "Confirmation
of Securities Transfer Registration" issued by the Shenzhen Branch of China Securities Depository & Clearing Corporation.
43. Other comprehensive income
Unit: RMB
185
Full Text of Goertek Inc. Annual Report 2023
2023
Less: Recorded in
Less: Recorded in
other
other
Amount comprehensive
comprehensive Less: Amount after Attributed
Opening incurred before income for the Closing
Item income for the Income tax attributable after tax to
balance income tax in previous period balance
previous period tax to the parent minority
the current and transferred in
and transferred in expenses company shareholders
period undistributed
profit or loss for
profits for the
the current period
current period
I. Other
comprehensive
income that
- -
cannot be 49,127,050.37 -119,814,848.69 -92,161,581.61
27,653,267.08 43,034,531.24
subsequently
reclassified into
profit or loss
Changes in
the fair value of
- -
investments in 49,127,050.37 -119,814,848.69 -92,161,581.61
27,653,267.08 43,034,531.24
other equity
instruments
II. Other
comprehensive
income that will 73,250,283.99 -67,721,492.41 -71,150,692.64 3,429,200.23 2,099,591.35
be reclassified
into profit or loss
Including: other
comprehensive
income that can
be converted into -12,650.40 -12,650.40 -12,650.40
profit or loss
under the equity
method
Difference
from translation
of financial 73,250,283.99 -67,708,842.01 -71,138,042.24 3,429,200.23 2,112,241.75
statements in
foreign currency
Total other
- -
comprehensive 122,377,334.36 -187,536,341.10 -163,312,274.25
24,224,066.85 40,934,939.89
incomes
Other explanations, including the adjustment of the effective part of cash flow hedging gains and losses into the initially recognized
amount of the hedged item:
Other comprehensive income that cannot be subsequently reclassified into profit and loss: Under the item of changes in the fair value
of investments in other equity instruments, RMB -27,653,267.08 is attributable to minority shareholders after tax, which is the equity
of other partners of the fund company. The statement is presented in other non-current liabilities.
Other comprehensive income that will be reclassified into profit or loss: Under the item of difference from translation of financial
statements in foreign currency, RMB 3,429,200.23 is attributable to minority shareholders after tax. Of which, RMB 1,593,397.38 is
the equity of other partners of the fund company. The statement is presented in other non-current liabilities.
44. Specific reserve
Unit: RMB
186
Full Text of Goertek Inc. Annual Report 2023
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
Safety production
7,551,472.89 6,000,159.22 1,551,313.67
expenses
Total 7,551,472.89 6,000,159.22 1,551,313.67
45. Surplus reserve
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
Statutory surplus reserve 1,446,536,121.51 218,530,482.45 1,665,066,603.96
Total 1,446,536,121.51 218,530,482.45 1,665,066,603.96
Explanation of surplus reserve, including the increase and decrease in the current period and explanation of reasons for changes:
According to the Company Law and the Articles of Association, the Company allocates 10% of net profits to the statutory surplus
reserve. The Company does not need to allocate further amounts if the cumulative amount of the statutory surplus reserve reaches more
than 50% of the registered capital.
The Company may extract any surplus reserves after extracting the statutory surplus reserve. Any surplus reserve may be used to cover
the losses of previous years or increase the share capital after approval.
46. General risk reserve
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
Reserve for risks in financing
6,081,200.00 6,081,200.00
factoring business
Note: According to the Notice by the General Office of the China Banking and Insurance Regulatory Commission of Strengthening
the Supervision and Administration of Commercial Factoring Enterprises (YBJBF [2019] No. 205), the Group allocates 1% of the
closing balance of financing factoring business to the provision for risks.
47. Undistributed profits
Unit: RMB
Item 2023 2022
Undistributed profits at the end of last period before
16,507,798,239.34 15,372,823,358.48
adjustment
Adjustments to the total undistributed profits at the
1,753,356.25
beginning of the period (upward +, downward -)
Undistributed profits at the beginning of the period
16,509,551,595.59 15,372,823,358.48
after adjustment
Plus: Net profit attributable to the owner of the
1,088,076,730.88 1,749,181,131.83
parent company in the current period
Less: Withdrawal of statutory surplus reserve 218,530,482.45
Common stock dividends payable 340,516,294.90 668,411,117.00
Add: Disposal of investments in other equity
54,204,866.03
instruments
Undistributed profits at the end of the period 17,038,581,549.12 16,507,798,239.34
Details of the adjustment of the undistributed profits at the beginning of the period:
187
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1) The undistributed profits affected by the retroactive adjustment in accordance with Accounting Standards for Business Enterprises
and the related new regulations at the beginning of the period is RMB 0.00.
2) The undistributed profits affected by the changes in accounting policy at the beginning of the period is RMB 1,753,356.25.
3) The undistributed profits affected by the correction of major accounting errors at the beginning of the period is RMB 0.00.
4) The undistributed profits affected by the change of consolidation scope caused by the common control at the beginning of the
period is RMB 0.00.
5) The undistributed profits affected by other adjustments at the beginning of the period is RMB 0.00.
48. Operating revenue and cost of sales
Unit: RMB
2023 2022
Item
Revenue Cost of sales Revenue Cost of sales
Main business 95,885,691,189.51 87,326,051,000.75 102,966,939,788.80 91,509,198,680.69
Other business 2,688,211,083.63 2,427,013,209.24 1,927,384,373.46 1,724,277,862.59
Total 98,573,902,273.14 89,753,064,209.99 104,894,324,162.26 93,233,476,543.28
Whether the lower of the audited net profit before and the audited net profit after deducting non-recurring gains and losses is negative
Yes No
Breakdown information on revenue and cost of sales:
Unit: RMB
Division 1 Total
Classification of contracts
Revenue Cost of sales Revenue Cost of sales
Business type
Including:
Electronic components 95,885,691,189.51 87,326,051,000.75 95,885,691,189.51 87,326,051,000.75
Other business income 2,688,211,083.63 2,427,013,209.24 2,688,211,083.63 2,427,013,209.24
By product
Precision components 12,991,833,787.27 10,329,768,695.82 12,991,833,787.27 10,329,768,695.82
Smart audio device 24,185,269,052.84 22,555,549,272.05 24,185,269,052.84 22,555,549,272.05
Smart hardware 58,708,588,349.40 54,440,733,032.88 58,708,588,349.40 54,440,733,032.88
Other business income 2,688,211,083.63 2,427,013,209.24 2,688,211,083.63 2,427,013,209.24
By business regions
Including:
Domestic 7,180,017,243.40 6,612,077,879.45 7,180,017,243.40 6,612,077,879.45
Overseas 91,393,885,029.74 83,140,986,330.54 91,393,885,029.74 83,140,986,330.54
By sales channel
Including:
Direct selling 98,164,328,961.68 89,396,202,983.71 98,164,328,961.68 89,396,202,983.71
Distribution 409,573,311.46 356,861,226.28 409,573,311.46 356,861,226.28
Total 98,573,902,273.14 89,753,064,209.99 98,573,902,273.14 89,753,064,209.99
Information about performance obligations:
None
Information about the trading price apportioned to remaining performance obligations:
None
Information about variable consideration in contracts:
None
188
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Significant contract changes or significant transaction price adjustments
None
49. Taxes and surcharges
Unit: RMB
Item 2023 2022
City maintenance and construction tax 46,734,999.87 66,516,485.50
Education surcharge 14,688,215.43 20,113,757.39
Housing property tax 77,267,139.98 72,739,156.82
Land use tax 20,383,547.91 12,404,902.13
Vehicle and vessel use tax 30,785.06 50,823.89
Stamp duties tax 71,773,016.90 75,852,578.16
Local education surcharges 12,871,438.36 19,015,218.97
Local water conservancy construction fund 160,251.76
Water resource tax 42.00 230.00
Environmental protection tax 95,164.14 77,095.67
Other offshore taxes 200,492.64
Total 244,044,842.29 266,930,500.29
Other explanations:
Please see Note VI. "Taxes", for details of the criteria for the accrual of various taxes and surcharges.
50. General and administrative expenses
Unit: RMB
Item 2023 2022
Employee benefits 1,378,056,739.51 1,167,274,863.96
Share-based apportioned payment 123,216,341.40 465,535,747.22
Office expenses 150,877,872.27 165,198,225.61
Consulting fees 101,711,188.82 54,679,471.16
Depreciation cost 123,107,194.98 99,094,366.24
Amortization of intangible assets 77,773,070.95 59,414,772.34
Recruitment and training fees 28,411,122.33 49,182,108.76
Rental fees 13,213,201.57 13,335,129.18
Entertainment expenses 32,629,383.74 27,173,035.83
Travel expenses 24,076,778.72 29,354,745.57
Security expenses 33,212,938.64 40,398,042.61
Property insurance 11,593,701.38 8,548,266.15
Other expenses 104,934,819.24 115,316,870.83
Total 2,202,814,353.55 2,294,505,645.46
51. Selling expenses
Unit: RMB
Item 2023 2022
Employee benefits 384,050,131.79 377,301,268.94
Share-based apportioned payment 16,712,392.29 44,473,697.53
189
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Item 2023 2022
Rental fees 5,501,255.44 5,212,260.22
Sales commission 14,212,724.06 19,599,978.50
Insurance expenses 15,520,423.96 17,874,354.85
Entertainment expenses 23,518,137.66 15,172,602.51
Travel expenses 27,461,090.78 16,715,766.24
Office expenses 22,905,403.44 21,541,427.80
Depreciation cost 15,677,618.00 14,823,196.77
Other expenses 2,591,126.00 15,584,288.69
Total 528,150,303.42 548,298,842.05
52. Research and development expenses
Unit: RMB
Item 2023 2022
Employee benefits 2,284,730,251.52 2,210,936,970.20
Direct input cost 1,119,216,253.90 1,822,282,210.46
Amortization of intangible assets 686,732,187.64 628,118,767.01
Depreciation cost 220,771,853.79 165,357,575.09
Share-based apportioned payment 44,742,283.43 126,807,377.90
Design fees 76,956,945.55 33,121,202.94
Other expenses 282,819,675.59 239,901,051.39
Total 4,715,969,451.42 5,226,525,154.99
53. Financial expenses
Unit: RMB
Item 2023 2022
Interest expense 544,691,878.33 303,539,076.90
Interest income -279,661,791.52 -189,356,256.02
Exchange gains and losses -10,282,609.82 -21,268,273.24
Other 97,027,671.65 56,208,534.10
Total 351,775,148.64 149,123,081.74
54. Other income
Unit: RMB
Sources of other income 2023 2022
Government grants 331,548,590.64 351,383,799.43
Tax benefit included 36,245,618.91 15,097,894.50
Return of individual tax handling fee 5,066,847.41 6,724,169.25
Total 372,861,056.96 373,205,863.18
55. Gains on changes in fair value
Unit: RMB
Sources of gains on changes in fair value 2023 2022
Financial assets held for trading 8,036,980.76 98,748,584.12
Including: Gains on changes in fair -82,278,125.54 164,830,672.72
190
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Sources of gains on changes in fair value 2023 2022
value due to derivative financial instruments
Financial liabilities held for trading 77,483,472.73 -171,961,305.71
Other non-current financial assets 30,388,698.95 16,131,386.62
Total 115,909,152.44 -57,081,334.97
56. Investment income
Unit: RMB
Item 2023 2022
Return on long-term equity investments measured
-28,435,998.08 2,298,237.32
by the equity method
Investment income from disposal of long-term
24,822,113.27 287,784,190.15
equity investments
Investment income from disposal of financial
-142,047,909.35 -309,999,635.90
assets held for trading
Investment income from products such as
85,249,228.88 20,466,167.48
certificates of deposits
Profits arising from derecognised financial assets
-5,724,287.70 -23,037,232.06
at amortised cost
Discount losses of financing receivables that meet
-7,257,012.91 -13,755,696.61
the conditions for derecognition
Total -73,393,865.89 -36,243,969.62
57. Credit impairment losses
Unit: RMB
Item 2023 2022
Credit impairment losses on bad debts of
19,420,684.72 -16,834,146.02
accounts receivable
Credit impairment losses on bad debts of
-2,025,618.66 2,613,550.10
other receivables
Total 17,395,066.06 -14,220,595.92
58. Asset impairment losses
Unit: RMB
Item 2023 2022
Loss of inventory falling prices and impairment
-299,626,936.00 -1,203,279,438.25
loss of contract performance costs
Impairment loss of fixed assets -579,464,921.66
Impairment loss of contract assets 1,194.69
Total -299,625,741.31 -1,782,744,359.91
59. Gains on disposal of assets
Unit: RMB
Source of income from disposal of assets 2023 2022
Gains on disposal of fixed assets -7,467,928.73 -47,534,013.23
Income from disposal of intangible assets 2,600,000.00
191
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Source of income from disposal of assets 2023 2022
Income from disposal of right-of-use assets 2,830,270.21 -364,926.50
Total -2,037,658.52 -47,898,939.73
60. Non-operating income
Unit: RMB
Amount recorded in current non-
Item 2023 2022
recurring gains and losses
Gains from damage and
21,927.79 464,291.05 21,927.79
liquidation of non-current assets
Other 34,795,207.29 21,013,169.39 34,795,207.29
Total 34,817,135.08 21,477,460.44 34,817,135.08
Other explanations:
Non-operating income - other incomes that are mainly unpayable amounts and liquidated damages collected, etc.
61. Non-operating expenses
Unit: RMB
Amount recorded in current non-
Item 2023 2022
recurring gains and losses
Donation given 3,204,356.82 4,251,201.32 3,204,356.82
Losses from damage and
146,689,062.70 117,427,303.86 146,689,062.70
liquidation of non-current assets
Other 2,959,378.43 1,051,865.31 2,959,378.43
Total 152,852,797.95 122,730,370.49 152,852,797.95
62. Income tax expenses
(1) Income tax expense statement
Unit: RMB
Item 2023 2022
Current income tax expenses 73,435,975.15 164,522,364.79
Deferred income tax expenses -301,690,868.04 -446,312,602.15
Total -228,254,892.89 -281,790,237.36
(2) Adjustment process of accounting profit and income tax expenses
Unit: RMB
Item 2023
Total profit 791,156,310.70
Income tax expense calculated at statutory/applicable tax rate 118,673,446.60
Impact of different tax rates applied to subsidiaries -96,593,877.62
Impact of adjusting income tax in previous periods -18,705,277.74
Impact of non-taxable income -930,017.51
Impact of non-deductible costs, expenses and losses 9,396,171.14
Impact of deductible loss of unrecognized deferred tax assets in
-37,028,429.29
previous period
Impact of deductible temporary differences or deductible losses of 271,089,406.31
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Item 2023
unrecognized deferred tax assets in current period
Changes in balance of beginning deferred tax assets/liabilities due
236,413.17
to tax rate adjustment
Impact of the weighted deduction of research and development
-423,580,388.30
expenses
Income tax credits for environmental equipment -208,407.07
Impact of share-based payment -50,888,864.93
Impact of subsidiary write-off 284,932.35
Income tax expenses -228,254,892.89
63. Other comprehensive income
Please see the Note VII. 43. for details.
64. Cash flow statement items
(1) Cash related to operating activities
Cash received related to other operating activities
Unit: RMB
Item 2023 2022
Government grants 318,295,104.60 343,436,863.16
Current account 1,192,795,974.16 1,258,014,604.41
Interest income 276,592,905.39 183,221,677.04
Other 187,507,561.62 139,368,250.38
Total 1,975,191,545.77 1,924,041,394.99
Cash paid related to other operating activities
Unit: RMB
Item 2023 2022
Research and development expenses 1,471,298,287.84 2,084,157,358.43
Current account 1,184,408,340.40 1,129,587,037.65
Office expenses 173,783,275.71 186,739,653.41
Rental fees 18,714,457.01 18,547,389.40
Consulting fees 101,711,188.82 54,679,471.16
Entertainment expenses 56,147,521.40 42,345,638.34
Travel expenses 51,537,869.50 46,070,511.81
Insurance expenses 27,114,125.34 26,422,621.00
Sales commission 14,212,724.06 19,599,978.50
Other 148,572,678.30 239,051,045.79
Total 3,247,500,468.38 3,847,200,705.49
(2) Cash related to investing activities
Cash received related to other investing activities
Unit: RMB
Item 2023 2022
Option premiums received 37,885,965.58 21,653,530.71
Margin recovered on investments in foreign 72,806,657.72
193
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Item 2023 2022
exchange derivative transactions
Total 110,692,623.30 21,653,530.71
Significant cash received related to investing activities
Unit: RMB
Item 2023 2022
Cash received from foreign exchange
514,370,207.66 223,389,534.87
derivative investment operations
Cash received on disposal of long-term
672,983,096.09
equity investments
Principal recovered on maturity of term
3,902,853,504.00
deposits
Total 4,417,223,711.66 896,372,630.96
Cash paid related to other investing activities
Unit: RMB
Item 2023 2022
Margin paid on investments in foreign exchange
72,806,657.72
derivative transactions
Net cash paid for disposal of subsidiaries and other
10,363,395.50
business units
Total 72,806,657.72 10,363,395.50
Significant cash paid related to investing activities
Unit: RMB
Item 2023 2022
Cash paid to acquire long-term equity investments 600,000,000.00 250,000,000.00
Principal to purchase large deposits 390,000,000.00 520,817,430.56
Principal deposited in term deposits 3,498,371,185.32 487,522,000.00
Total 4,488,371,185.32 1,258,339,430.56
(3) Cash related to financing activities
Cash received related to other financing activities
Unit: RMB
Item 2023 2022
Various securities in other currencies
2,758,448,774.94 2,601,999,441.96
recovered
Interest income on raised funds 3,068,886.13 6,134,578.99
Contributions from other partners of the
188,082,000.00 75,765,967.07
fund company
Subscription of employee stock ownership
504,990,652.00
plan
Proceeds from the sale of treasury shares
39,355,486.02
not meeting exercise conditions
Borrowings from non-financial institutions,
11,000,000.00
etc.
Total 3,504,945,799.09 2,683,899,988.02
Explanations on cash received related to other financing activities:
None
194
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Cash paid related to other financing activities
Unit: RMB
Item 2023 2022
Various security deposit payments for other
2,813,467,201.78 3,078,483,092.56
monetary capital
Rental fees payment 111,526,372.99 128,750,261.16
Financing expense paid with borrowings 9,000,000.00 103,495,260.30
Listing expense of the Goertek
2,180,318.91 4,263,871.42
Microelectronics subsidiary
Repurchase of treasury stock 177,655,190.77
Cash paid for acquisition of minority
23,273,750.00
interests in subsidiaries
Repayment of borrowings from non-
14,205,910.21
financial institutions and interest, etc.
Total 3,151,308,744.66 3,314,992,485.44
Explanations of cash paid for other financing activities:
None
Changes in liabilities arising from financing activities
Applicable Not applicable
Unit: RMB
Increase in the current period Decrease in the current period
Item Opening balance Non-cash Non-cash Closing balance
Cash variations Cash variations
variations variations
Short-term
7,120,846,026.67 19,719,120,456.00 320,299,573.43 21,945,774,739.48 5,214,491,316.62
borrowings
Other accounts
payable -
340,516,294.90 340,516,294.90
dividends
payable
Long-term
borrowings
(including
3,198,791,555.56 5,854,624,000.01 390,198,380.70 1,866,605,832.83 7,577,008,103.44
those maturing
within one
year)
Lease
liabilities
(including
573,531,279.93 194,049,887.86 111,526,372.99 11,387,559.91 644,667,234.89
those maturing
within one
year)
Total 10,893,168,862.16 25,573,744,456.01 1,245,064,136.89 24,264,423,240.20 11,387,559.91 13,436,166,654.95
(4) Explanation on cash flows presented on a net basis
None
195
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(5) Significant activities and financial effects that do not involve current cash flows but affect the
Company's financial position or may affect the Company's cash flows in the future
None
65. Supplementary information for cash flow statement
(1) Supplementary information for cash flow statement
Unit: RMB
Supplementary information Amount of current period Amount in previous period
1. Reconciliation of net profit to cash flow from
operating activities
Net profit 1,019,411,203.59 1,791,018,384.79
Add: Provision for impairment of assets 299,625,741.31 1,782,744,359.91
Credit impairment losses -17,395,066.06 14,220,595.92
Depreciation of fixed assets, depletion of
oil and gas assets and depreciation of bearer 2,938,786,849.35 2,737,354,154.43
biological assets
Depreciation of right-of-use assets 128,357,416.63 132,043,964.75
Amortization of intangible assets 775,354,156.85 688,160,164.63
Long-term prepaid expenses 226,069,725.83 92,970,355.03
Losses on disposal of fixed assets,
intangible assets and other long-term assets (Use "- 2,037,658.52 47,898,939.73
" for gain)
Loss on retirement of fixed assets (Use "-"
146,667,134.91 116,963,012.81
for gain)
Loss on changes in fair value (Use "-" for
-115,909,152.44 57,081,334.97
gain)
Financial expenses (Use "-" for gain) 458,210,031.50 -67,001,475.56
Investment loss (Use "-" for gain) 60,412,565.28 -548,959.05
Decrease in deferred tax assets (Use "-" for
-111,839,854.19 -874,406,201.70
gain)
Increase in deferred tax liabilities (Use "-"
-190,279,710.41 426,185,243.00
for decrease)
Decrease in inventory (Use "-" for increase) 7,430,247,429.32 -6,108,031,112.07
Decrease of operating receivable items
2,106,126,474.60 -2,061,081,561.57
(Use "-" for increase)
Increase in operational payables (Use "-"
-7,184,440,025.66 8,882,166,156.12
for decrease)
Other 180,445,664.451 659,376,008.54
Net cash flow from operating activities 8,151,888,243.38 8,317,113,364.68
2. Significant investing and financing activities
that do not involve cash receipts and payments:
Debts transferred to capital
Convertible corporate bonds due within one year
Fixed assets under finance lease
3. Net changes in cash and cash equivalents:
196
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Supplementary information Amount of current period Amount in previous period
Closing balance of cash 13,152,726,641.78 10,799,993,468.81
Less: Opening balance of cash 10,799,993,468.81 9,137,900,902.04
Add: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents 2,352,733,172.97 1,662,092,566.77
Note: 1 The other RMB 180,445,664.45 was generated from share-based payments, as detailed in Note XV. 4. "Share-based
Payment Expenses for the Current Period".
(2) Net cash paid for the acquisition of subsidiaries in the current period
Unit: RMB
Amount
Cash or cash equivalents paid in the period for business
588,524,771.29
combination occurring in the period
Including:
Uphoton Technology (Shaoxing) Co., Ltd. 588,524,771.29
Less: Cash and cash equivalents held by the subsidiary on the date
130,861,489.79
of purchase
Including:
Uphoton Technology (Shaoxing) Co., Ltd. 130,861,489.79
Including:
Net cash paid to acquire subsidiary 457,663,281.50
(3) Net amount of cash received for disposal of subsidiaries in the current period
Unit: RMB
Amount
Cash or cash equivalents received in the current period from the
0.00
disposal of subsidiaries
Less: Cash and cash equivalents held by the Company on the date
0.00
of loss of control
Plus: Cash or cash equivalents received in the current period from
2,205,000.00
the disposal of subsidiary in prior periods
Including:
Qingdao Resonance Venture Capital Management Co., Ltd. 2,205,000.00
Net cash received on disposal of subsidiaries 2,205,000.00
(4) Composition of cash and cash equivalents
Unit: RMB
Item Closing balance Opening balance
I. Cash 13,152,726,641.78 10,799,993,468.81
Including: Cash on hand 60,959.92 33,671.21
Bank deposits that can be used for
13,030,309,956.22 10,799,959,797.60
payment at any time
Other monetary funds that can be used
122,355,725.64
for payment at any time
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Item Closing balance Opening balance
II. Cash and cash equivalents balance at the
13,152,726,641.78 10,799,993,468.81
end of the period
(5) Presentation of assets falling under the category of cash and cash equivalents restricted in use
None
(6) Monetary capital other than cash and cash equivalents
Unit: RMB
Reasons for not being categorized as
Item Amount of current period Amount in previous period
cash and cash equivalents
Bank deposits - term deposits and
128,296,588.99 490,129,084.15 Term of more than three months
accrued interest
Other monetary capital 1,456,289,098.94 1,392,748,538.84 Restriction of use
Total 1,584,585,687.93 1,882,877,622.99
(7) Description of other significant activities
None
66. Notes on items in the statement of changes in equity
Indicate the "Other" items for which adjustments have been made to the prior year-end balance and the amount of such adjustments:
None
67. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
Item Closing foreign currency balance Converted exchange rate Closing converted RMB balance
Cash at bank and on hand 2,433,851,049.95
Including: USD 230,164,405.72 7.0827 1,630,185,436.39
EUR 733,794.18 7.8592 5,767,035.22
HKD 1,463,699.77 0.90622 1,326,434.01
JPY 52,217,737.00 0.050213 2,622,009.23
KRW 284,841,404.77 0.005514 1,570,615.51
TWD 5,786,384.00 0.230557 1,334,091.34
VND 2,687,704,355,708.82 0.000292 784,809,671.87
DKK 5,918,355.00 1.053630 6,235,756.38
Accounts receivable 10,490,308,374.73
Including: USD 1,479,162,188.93 7.0827 10,476,462,035.53
EUR 78,342.34 7.8592 615,708.12
HKD
JPY 9,061,056.00 0.050213 454,982.80
KRW 71,774,637.29 0.005514 395,765.35
TWD 47,750,423.80 0.230557 11,009,194.46
VND 4,694,138,581.21 0.000292 1,370,688.47
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Item Closing foreign currency balance Converted exchange rate Closing converted RMB balance
Other receivables 38,115,094.26
Including: USD 1,502,063.73 7.0827 10,638,666.78
EUR 960.00 7.8592 7,544.83
JPY 149,326,688.00 0.050213 7,498,140.98
KRW 252,023,691.00 0.005514 1,389,658.63
TWD 1,747,793.00 0.230557 402,965.91
VND 62,069,801,366.18 0.000292 18,124,382.00
DKK 51,000.00 1.053630 53,735.13
Short-term borrowings 1,104,215,895.17
Including: USD 147,645,600.57 7.0827 1,045,729,495.16
VND 200,295,890,446.31 0.000292 58,486,400.01
Accounts payable 12,127,485,014.60
Including: USD 1,654,951,358.41 7.0827 11,721,523,986.21
EUR 864,357.45 7.8592 6,793,158.07
HKD 90,000.00 0.90622 81,559.80
JPY 27,656,995.38 0.050213 1,388,740.71
KRW 2,891,931.97 0.005514 15,946.11
GBP 4,252.90 9.0411 38,450.89
VND 1,356,471,678,893.57 0.000292 396,089,730.24
DKK 1,474,372.00 1.053630 1,553,442.57
Other payables 11,454,241.60
Including: USD 628,315.76 7.0827 4,450,172.03
EUR 2,880.00 7.8592 22,634.50
JPY 53,166,572.00 0.050213 2,669,653.08
KRW 94,893,322.00 0.005514 523,241.78
TWD 3,499,525.00 0.230557 806,839.99
VND 7,189,251,520.82 0.000292 2,099,261.44
DKK 837,522.45 1.053630 882,438.78
Current portion of non-
568,619,254.17
current liabilities
Including: USD 74,937,875.62 7.0827 530,762,491.65
JPY 143,364,878.90 0.050213 7,198,780.66
VND 104,993,088,548.53 0.000292 30,657,981.86
Lease liabilities 66,831,355.80
Including: USD 2,568,504.07 7.0827 18,191,943.78
JPY 73,176,220.01 0.050213 3,674,397.54
VND 153,989,775,615.32 0.000292 44,965,014.48
Long-term borrowings 1,047,470,751.86
Including: USD 147,891,447.03 7.0827 1,047,470,751.86
EUR
HKD
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(2) Explanation of overseas operating entities, including, the main overseas operating places, bookkeeping
base currency and selection basis for important overseas operating entities, and the reasons for changes in
bookkeeping base currency.
Applicable Not applicable
Whether there is
Main location
Name of the important overseas Accounting any change in the
of business Accounting currency selection basis
operating entity currency accounting
operation
currency
Legal currency of the country where
Goertek Vina Co., Ltd Vietnam VND No
it is registered
Goertek Technology Vina Company Legal currency of the country where
Vietnam VND No
Limited it is registered
Currency adopted in business
Goertek (HongKong) Co., Limited Hong Kong USD No
receipts and payments
68. Lease
(1) The Company acts as the lessee
Applicable Not applicable
Variable lease payments not included in the measurement of lease liabilities
Applicable Not applicable
Lease costs for short-term leases or low-value assets with simplified treatment
Applicable Not applicable
① For information on right-of-use assets and lease liabilities, please see Note VII. 18 and 37.
② Information on items recorded in current profit or loss and relevant asset costs
Amount for the current period Amount for the previous period
Item
(RMB) (RMB)
Short-term lease expense (simplified treatment applies) 32,797,509.77 70,892,405.81
Interest on lease liabilities included in finance expenses 18,846,223.92 17,092,607.19
Income derived from the sublease of the right-of-use assets 661,958.40 1,196,937.46
③ Cash outflows related to leases
Amount for the Amount for the
Item Category of cash flows current period previous period
(RMB) (RMB)
Cash for repayment of principal and interest of Cash outflows from
111,526,372.99 128,750,261.16
lease liabilities financing activities
Payment for short-term leases and leases for low- Cash outflows from
32,797,509.77 70,892,405.81
value assets (simplified treatment applies) operating activities
Total 144,323,882.76 199,642,666.97
Situations involving sale and leaseback transactions
None
(2) The Company acts as the lessor
Operating leases as the lessor
Applicable Not applicable
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Unit: RMB
Including: Income related to variable lease
Item Lease income
payments not included in lease receipts
Other business income 138,288,596.78
Total 138,288,596.78
Finance leases as the lessor
Applicable Not applicable
Undiscounted lease receipts for each of the next five years
Applicable Not applicable
Reconciliation of undiscounted lease receipts to net investment in leases
None
(3) Gains or losses on sales under finance leases recognized as a manufacturer or distributor
Applicable Not applicable
69. Others
None
VIII. Research and Development Expenditures
Unit: RMB
Item 2023 2022
Employee benefits 2,582,668,704.22 2,512,120,442.26
Direct input cost 1,317,327,855.54 2,050,496,920.16
Amortization of intangible assets 686,736,441.00 628,231,765.42
Depreciation cost 261,114,008.41 183,966,651.97
Share-based apportioned payment 44,742,283.43 129,159,362.00
Design fees 79,996,429.65 36,530,138.39
Other expenses 286,173,001.41 283,297,996.40
Total 5,258,758,723.66 5,823,803,276.60
Including: Expensed R&D expenditure 4,715,969,451.42 5,226,525,154.99
Capitalized R&D expenditure 542,789,272.24 597,278,121.61
1. R&D projects eligible for capitalization
Unit: RMB
Decreased amount in the current
Increased amount in the current period
period
Opening Closing
Item Internal Increase in Recognized as Transfer to
balance balance
development Other business intangible current profit Other
costs combination assets and loss
Project 1 51,729,692.37 183,440,177.79 235,169,870.16
Project 2 23,624,892.56 38,341,210.21 61,966,102.77
Project 3 32,810,345.82 32,810,345.82
Project 4 24,275,113.11 24,275,113.11
Project 5 13,895,824.91 13,895,824.91
Other 285,823,526.98 250,026,600.40 457,162,678.29 78,687,449.09
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Decreased amount in the current
Increased amount in the current period
period
Opening Closing
Item Internal Increase in Recognized as Transfer to
balance balance
development Other business intangible current profit Other
costs combination assets and loss
Total 361,178,111.91 542,789,272.24 457,162,678.29 446,804,705.86
Significant capitalized R&D projects
Estimated completion Expected form of Timing of start of Specific basis for start
Item R&D progress
time economic benefits capitalization of capitalization
Qualified engineering
Project 1 95% January 31, 2024 Generate revenue February 28, 2022
validation test
Qualified engineering
Project 2 95% January 31, 2024 Generate revenue February 28, 2022
validation test
Impairment provision for development expenditures
None
2. Important outsourced R&D projects in progress
None
IX. Changes in Consolidation Scope
1. Business combination not under common control
(1) Business combination not under the same control occurring during the period
Unit: RMB
Revenue of the Net profit of the Cash flow of the
Basis for
acquired entity acquired entity acquired entity
Name of the Date of Equity Method of determining
Cost of equity Acquisition from the from the from the
acquired equity ratio equity the
acquisition date acquisition date acquisition date acquisition date
entity acquisition acquired acquisition acquisition
to the end of the to the end of the to the end of the
date
period period period
Uphoton
Monetary Actual
Technology May 30, November
200,000,000.00 10.53% capital acquisition 13,925,424.03 -19,402,755.46 -74,646,122.83
(Shaoxing) 2022 20, 2023
injection of control
Co., Ltd.
Other explanations:
Uphoton Technology (Shaoxing) Co., Ltd. includes its headquarters and its subsidiaries Uphoton Technology (Beijing) Co., Ltd.,
Jiaxing Uphoton Optoelectronics Technology Co., Ltd., Shaoxing UPhoton Precision Technology Co., Ltd., Hangzhou Uphoton
Optoelectronics Technology Co., Ltd., Tianjin Uphoton Technology Co., Ltd., Nanjing Uphoton Technology Co., Ltd., Hefei 3D
OptoLink Technology Co., Ltd., and Jiaxing Guochao Optoelectronics Technology Co.,Ltd., totaling nine companies.
(2) Cost of combination and goodwill
Unit: RMB
Cost of combination Uphoton Technology (Shaoxing) Co., Ltd.
—Cash 588,524,771.29
—Fair value of non-cash assets
- Fair value of debts issued or assumed
- Fair value of equity securities issued 215,372,464.72
- Fair value of contingent considerations
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Cost of combination Uphoton Technology (Shaoxing) Co., Ltd.
- Fair value at acquisition date of equity interests held prior to
206,164,383.56
acquisition date
- Others
Total cost of combination 1,010,061,619.57
Less: Fair value of net identifiable assets acquired 421,886,825.09
Amount by which goodwill/cost of combination is less than the
588,174,794.48
fair value of identifiable net assets acquired
Method of determining the fair value of the cost of combination:
The fair value of the net assets being consolidated is determined in accordance with the valuation results determined by the asset-based
method, and the cost of combination is determined by negotiation in accordance with the valuation results determined by the income
approach.
The subsidiary, Goertek Optical Technology Co., Ltd, acquired 100% of the equity held by the original shareholder of Uphoton
Technology (Shaoxing) Co., Ltd. by a combination of directed capital increase and cash payment, including the new registered capital
(paid-in capital) of 60,280,745.00 shares, with a par value of RMB1 per share. The issue price was determined in accordance with the
valuation results determined by the income approach.
Explanations of contingent considerations and changes thereto
None
Major reasons for large goodwill:
At the acquisition date, goodwill resulted from the excess of the acquirer's cost of combination over the fair value of the net identifiable
assets of the acquired entity.
(3) Identifiable assets and liabilities of the acquired entity at the acquisition date
Unit: RMB
Uphoton Technology (Shaoxing) Co., Ltd.
Fair value at the acquisition date Book value at the acquisition date
Assets:
Cash at bank and on hand 131,355,031.79 131,355,031.79
Accounts receivable 12,986,883.49 12,986,883.49
Inventories 17,977,451.45 12,636,493.40
Fixed assets 22,080,645.00 20,896,103.66
Intangible assets 277,469,592.12 29,674,119.84
Construction in progress 129,304,411.07 134,522,249.80
Other assets 62,937,765.26 62,937,765.26
Liabilities:
Borrowings 151,181,875.001 151,181,875.00
Accounts payable 18,979,206.48 18,979,206.48
Deferred tax liabilities 41,722,056.31
Other liabilities 20,239,756.46 21,200,754.32
Net asset 421,988,885.93 213,646,811.44
Less: Minority interests 102,060.84 -1,278,622.39
Net assets acquired 421,886,825.09 214,925,433.83
Note: 1 represents long-term borrowings
Method of determining the fair value of identifiable assets and liabilities:
The fair value of identifiable assets and liabilities is determined in accordance with the valuation results determined by the asset-based
method.
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Contingent liabilities of the acquired entity assumed in a business combination:
None
(4) Gains or losses arising from the remeasurement of equity interests held prior to the date of acquisition at fair value
Whether there are transactions in which a business combination is realized in steps through multiple transactions and control is
obtained during the reporting period.
Yes No
Unit: RMB
Method of Amounts
determining transferred to
Gains or losses
the fair value investment
Time of arising from the
Acquisition of equity earnings or
acquisition Percentage Carrying Fair value of remeasurement
method of interests retained
of equity of equity Acquisition amount of equity interest of equity
Name of equity previously earnings from
interest interest cost of equity equity interest previously held interests
the interest held prior to other
previously acquired interest held held prior to the prior to the previously held
acquired held prior the comprehensive
held prior prior to the prior to the acquisition date acquisition date prior to the
entity to the acquisition income related
to the acquisition acquisition date at the at the acquisition date
acquisition date at the to previously
acquisition date acquisition date acquisition date at fair value at
date acquisition held equity
date the acquisition
date and interests prior
date
major to the
assumptions acquisition date
Uphoton
Monetary
Technology May 30, Income
10.53% 200,000,000.00 capital 183,544,068.53 206,164,383.56 24,822,113.27 2,201,798.24
(Shaoxing) 2022 Approach
injection
Co., Ltd.
(5) Explanations relating to cases in which the combination consideration or the fair value of the acquiree's identifiable assets
or liabilities cannot be reasonably determined at the acquisition date or at the end of the period in which the combination
took place
None
(6) Explanation of other matters:
None
2. Business combination under common control
None
3. Counter purchase
None
4. Disposal of subsidiaries
Whether there is any transaction or event of loss of control of subsidiaries in the current period
Yes No
Whether there is any step-by-step disposal of investment in a subsidiary through multiple transactions and loss of control in the
current period
Yes No
5. Change of consolidation scope for other reasons
Explain the changes in the consolidation scope caused by other reasons (such as newly established subsidiaries, liquidation
subsidiaries, etc.) and relevant information:
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During the current period, the Company acquired 3 subsidiaries through establishment. They are respectively Chongqing Goertek Auto
Technology Co., Ltd., Goertek Smart Technology Vina Co.,Ltd., and GMI Technology GmbH.
The Company deregistered one of its subsidiaries, Kunshan Goertek Electronics Co., Ltd. during this period.
6. Others
None
X. Interests in Other Entities
1. Interests in subsidiaries
(1) Composition of the Group
Main location Percentage
Name of Registration Business Acquisition
Registered capital of business
subsidiary place nature Direct Indirect method
operation
Business
combination
Weifang Goertek involving
Electronics Co., RMB 1,636,601,925 Weifang Weifang Production 85.89% 14.11% enterprises
Ltd. under
common
control
Goertek R&D,
Microelectronics RMB 582,080,100 Qingdao Qingdao production & 87.75% Establishment
Inc. sales
Qingdao Goertek
R&D,
Microelectronics
RMB 100,000,000 Qingdao Qingdao production & 87.75% Establishment
Research Institute
sales
Co., Ltd.
Qingdao Goertek R&D,
Intelligent Sensor RMB 500,000,000 Qingdao Qingdao production & 87.75% Establishment
Co., Ltd. sales
Business
combination
Weifang Goertek R&D, not involving
Microelectronics RMB 500,000,000 Weifang Weifang production & 87.75% enterprises
Co., Ltd. sales under
common
control
Rongcheng
R&D,
Goertek
RMB 300,000,000 Rongcheng Rongcheng production & 87.75% Establishment
Microelectronics
sales
Co., Ltd.
Beijing Goertek
Microelectronics RMB 5,000,000 Beijing Beijing Sales 87.75% Establishment
Co., Ltd.
Shenzhen
Goertek R&D and
RMB 5,000,000 Shenzhen Shenzhen 87.75% Establishment
Microelectronics sales
Co., Ltd.
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Main location Percentage
Name of Registration Business Acquisition
Registered capital of business
subsidiary place nature Direct Indirect method
operation
Wuxi Goertek
Microelectronics RMB 5,000,000 Wuxi Wuxi R&D 87.75% Establishment
Co., Ltd.
Shanghai Goertek
Microelectronics RMB 10,000,000 Shanghai Shanghai R&D 87.75% Establishment
Co., Ltd.
Goertek
Microelectronics
USD 22.4035 million Hong Kong Hong Kong Investment 87.75% Establishment
Holdings Co.,
Ltd.
Goertek
Microelectronics
USD 0.5 million Hong Kong Hong Kong Trade 87.75% Establishment
(Hong Kong)
Co., Ltd.
GOERTEK
MICROELECTR R&D and
USD 1 million USA USA 87.75% Establishment
ONICS sales
CORPORATION
GOERTEK
MICROELECTR R&D and
KRW 300 million Korea Korea 87.75% Establishment
ONICS KOREA sales
CO.,LTD
GOERTEK
MICROELECTR
ONICS Production &
VND 904,657 million Vietnam Vietnam 87.75% Establishment
VIETNAM sales
COMPANY
LIMITED
GMI Technology R&D and
EUR 50,000 Austria Austria 87.75% Establishment
GmbH sales
Weifang Goertek Import and
RMB 50,000,000 Weifang Weifang 100.00% Establishment
Trading Co., Ltd. export trade
Yishui Goertek
Production &
Electronics Co., RMB 30,000,000 Yishui Yishui 100.00% Establishment
sales
Ltd.
Yili Precision
Production &
Manufacturing RMB 330,000,000 Weifang Weifang 100.00% Establishment
sales
Co., Ltd.
Business
combination
Weifang Goertek
not involving
Communication Production &
RMB 10,500,000 Weifang Weifang 100.00% enterprises
Technology Co., sales
under
Ltd.
common
control
Goertek Optical Production & Business
RMB 981,960,745 Weifang Weifang 61.10%
Technology Co., sales combination
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Main location Percentage
Name of Registration Business Acquisition
Registered capital of business
subsidiary place nature Direct Indirect method
operation
Ltd not involving
enterprises
under
common
control
Goertek Optical
R&D,
Technology
RMB 100,000,000 Qingdao Qingdao production & 61.10% Establishment
(Qingdao) Co.,
sales
Ltd
Goertek Optical
R&D,
Technology
RMB 100,000,000 Shanghai Shanghai production & 61.10% Establishment
(Shanghai) Co.,
sales
Ltd
Business
combination
Uphoton
not involving
Technology R&D and
RMB 214,000 Shaoxing Shaoxing 61.10% enterprises
(Shaoxing) Co., sales
under
Ltd.
common
control
Business
combination
Uphoton
not involving
Technology
RMB 10,000,000 Beijing Beijing R&D 61.10% enterprises
(Beijing) Co.,
under
Ltd.
common
control
Business
combination
Jiaxing Uphoton
R&D, not involving
Optoelectronics
RMB 250,000,000 Jiaxing Jiaxing production & 61.10% enterprises
Technology Co.,
sales under
Ltd.
common
control
Business
Shaoxing combination
Uphoton R&D, not involving
Precision RMB 115,000,000 Shaoxing Shaoxing production & 61.10% enterprises
Technology Co., sales under
Ltd. common
control
Business
Hangzhou combination
Uphoton not involving
R&D and
Optoelectronics RMB 45,000,000 Hangzhou Hangzhou 61.10% enterprises
sales
Technology Co., under
Ltd. common
control
Tianjin Uphoton RMB 20,000,000 Tianjin Tianjin R&D and 61.10% Business
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Main location Percentage
Name of Registration Business Acquisition
Registered capital of business
subsidiary place nature Direct Indirect method
operation
Technology Co., sales combination
Ltd. not involving
enterprises
under
common
control
Business
combination
Nanjing Uphoton not involving
R&D and
Technology Co., RMB 10,000,000 Nanjing Nanjing 61.10% enterprises
sales
Ltd. under
common
control
Business
combination
Hefei 3D
not involving
OptoLink R&D and
RMB 5,315,789 Hefei Hefei 61.10% enterprises
Technology Co., sales
under
Ltd.
common
control
Business
combination
Jiaxing Guochao
not involving
Optoelectronics R&D and
RMB 3,333,300 Jiaxing Jiaxing 42.77% enterprises
Technology sales
under
Co.,Ltd.
common
control
Goertek
Technology Co., RMB 950,000,000 Qingdao Qingdao R&D 100.00% Establishment
Ltd.
Business
combination
Beijing Goertek involving
Technology Co., RMB 10,000,000 Beijing Beijing R&D 100.00% enterprises
Ltd. under
common
control
Qingdao Goertek
Acoustics R&D and
RMB 20,000,000 Qingdao Qingdao 100.00% Establishment
Technology Co., trading
Ltd.
Business
combination
Shenzhen
involving
Goertek R&D and
RMB 50,000,000 Shenzhen Shenzhen 100.00% enterprises
Technology Co., design
under
Ltd.
common
control
Shanghai Goertek RMB 10,000,000 Shanghai Shanghai R&D 100.00% Establishment
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Main location Percentage
Name of Registration Business Acquisition
Registered capital of business
subsidiary place nature Direct Indirect method
operation
Technology Co.,
Ltd.
Nanjing Goertek
Technology Co., RMB 50,000,000 Nanjing Nanjing R&D 100.00% Establishment
Ltd.
Business
combination
Weifang Lokomo involving
Production &
Precision RMB 50,000,000 Weifang Weifang 100.00% enterprises
sales
Industry Co., Ltd. under
common
control
Goertek
Investment Co., RMB 100,000,000 Shanghai Shanghai Investment 100.00% Establishment
Ltd.
Beijing Goertek
Investment
Investment
RMB 50,000,000 Beijing Beijing asset 100.00% Establishment
Management Co.,
management
Ltd.
Olive Smart
Hardware Equity
RMB 300,000,000 Qingdao Qingdao 100.00% Establishment
Investment investment
Center LP
Dongguan
JoyForce R&D,
Precision RMB 180,000,000 Dongguan Dongguan production & 100.00% Establishment
Manufacturing sales
Co., Ltd.
Goertek
R&D,
Intelligence
RMB 350,000,000 Dongguan Dongguan production & 100.00% Establishment
Technology Co.,
sales
Ltd.
Rongcheng
R&D,
Goertek
RMB 2,100,000,000 Rongcheng Rongcheng production & 100.00% Establishment
Technology Co.,
sales
Ltd.
Qingdao Goertek
Commercial Commercial
RMB 50,000,000 Qingdao Qingdao 100.00% Establishment
Factoring Co., factoring
Ltd.
Nanning Goertek R&D,
Electronics Co., RMB 80,000,000 Nanning Nanning production & 100.00% Establishment
Ltd sales
Nanning Goertek
RMB 10,000,000 Nanning Nanning Trade 100.00% Establishment
Trading Co., Ltd.
Xi'an Goertek
Electronic RMB 8,000,000 Xi'an Xi'an R&D 100.00% Establishment
Technology Co.,
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Main location Percentage
Name of Registration Business Acquisition
Registered capital of business
subsidiary place nature Direct Indirect method
operation
Ltd.
Yishui TECO
R&D,
Electronic
RMB 145,000,000 Yishui Yishui production & 100.00% Establishment
Technology Co.,
sales
Ltd.
Qingdao
Resonance Phase
I Venture Capital
RMB 757,580,000 Qingdao Qingdao Investment 52.80% Establishment
Fund Partnership
(Limited
Partnership)
Weifang Goertek
Production &
Electronics Co., RMB 1,350,000,000 Weifang Weifang 100.00% Establishment
sales
Ltd.
Qingdao Goertek
Horizons Production &
RMB 100,000,000 Qingdao Qingdao 100.00% Establishment
Technology Co., sales
Ltd
Weifang High-
tech Zone Education
RMB 300,000 Weifang Weifang 100.00% Establishment
Goertek and training
Education Center
Chongqing
R&D,
Goertek Auto
RMB 10,000,000 Chongqing Chongqing production & 100.00% Establishment
Technology Co.,
sales
Ltd.
Goertek Vina Production &
USD 40 million Vietnam Vietnam 98.00% 2.00% Establishment
Co., Ltd sales
Goertek
R&D and
Technology KRW 1,535.135 million Korea Korea 100.00% Establishment
trading
Korea Co., Ltd.
Goertek
Trade and
(HongKong) Co., USD 1 million Hong Kong Hong Kong 100.00% Establishment
investment
Limited
Goertek
Technology Vina Production &
USD 120 million Vietnam Vietnam 100.00% Establishment
Company sales
Limited
Goertek Precision
Industry Vietnam Production &
USD 100 million Vietnam Vietnam 100.00% Establishment
Company sales
Limited
Goertek Smart
Production &
Technology Vina USD 60 million Vietnam Vietnam 100.00% Establishment
sales
Co.,Ltd.
Goertek Europe
DKK 50,000 Denmark Denmark Sales services 100.00% Establishment
ApS
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Main location Percentage
Name of Registration Business Acquisition
Registered capital of business
subsidiary place nature Direct Indirect method
operation
Goertek Seiki R&D,
Technology Co., JPY 80 million Japan Japan production & 100.00% Establishment
Ltd. sales
Optimas Capital
USD 56,488,691.9 Hong Kong Hong Kong Investment 76.92% Establishment
Partners Fund LP
Business
combination
not involving
Goertek Electroni R&D and
USD 0.1 million USA USA 100.00% enterprises
cs, Inc. trading
under
common
control
Goertek
Technology TWD 28.899 million Taiwan Taiwan Trade 100.00% Establishment
Taiwan Co., Ltd.
Goertek
R&D and
Technology Japan JPY 50 million Japan Japan 100.00% Establishment
trading
Co., Ltd.
Goertek
Technology Trade and
USD 1 million Hong Kong Hong Kong 100.00% Establishment
(HongKong) Co., investment
Limited
Explanation of the shareholding ratio in subsidiaries different from the voting ratio:
None
Basis for holding half or less of the voting power but still controlling the investee, and holding more than half of the voting rights but
not controlling the investee:
None
Basis for controlling important structured entities included in the consolidation scope:
None
Basis for determining whether a company is an agent or a principal:
None
(2) Important non-wholly-owned subsidiary
None
(3) Main financial information of major non-wholly-owned subsidiaries
None
(4) Major restrictions on using the Group's assets and paying off the Group's debts
None
(5) Financial support or other support provided to structured entities included in consolidated financial statements
None
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2. The share of owner's equity in the subsidiary has changed and still controls the transactions of the
subsidiary
(1) Explanation of changes in the share of shareholders' equity in subsidiaries
① In January 2023, the subsidiary Qingdao Resonance Phase I Venture Capital Fund Partnership (Limited Partnership) accepted a
unilateral capital increase of RMB 80.8080 million from the minority shareholders, with paid-in capital of RMB 80.8080 million. After
the completion of this capital increase, the Company's shareholding in Qingdao Resonance Phase I Venture Capital Fund Partnership
(Limited Partnership) changed from 72.00% to 52.80%, and the capital surplus increased by RMB 652,164.33 as a result of this
transaction.
② In October 2023, the Company purchased 1.8468% of the equity held by Jiang Long, a minority shareholder of its subsidiary,
Goertek Microelectronics Inc. with its own funds of RMB 23,273,750.00. After the completion of this transaction, the Company's
shareholding in Goertek Microelectronics Inc. changed from 85.90% to 87.75%, and the capital surplus increased by RMB
57,719,238.80 as a result of this transaction.
③ In November 2023, the subsidiary Goertek Optical Technology Co., Ltd. purchased 100% of the equity of Uphoton Technology
(Shaoxing) Co., Ltd. in which the Company is a shareholder, (hereinafter referred to as "Uphoton Technology"). Among them, the
Company purchased 67.541% equity interest in Uphoton Technology (including 10.526% equity interest held by the Company and
0.818% equity interest held by a related party) with its own funds of approximately RMB 795 million, and purchased 32.459% equity
interest in Uphoton Technology by increasing its registered capital by RMB 60,280,745.00 through directional share capital increase.
After the completion of this capital increase, the Company's shareholding in Goertek Optical Technology Co., Ltd. changed from 65.10%
to 61.10%, and the capital surplus was increased by RMB 125,729,953.05 as a result of this transaction.
(2) The impact of transactions on minority' equity and the equity attributable to the parent company
Unit: RMB
Qingdao Resonance Phase I
Venture Capital Fund Goertek Optical Technology
Goertek Microelectronics Inc.
Partnership (Limited Co., Ltd
Partnership)
Purchase cost/disposal
80,808,000.00 23,273,750.00 215,372,464.72
consideration
—Cash 80,808,000.00 23,273,750.00
—Fair value of non-cash assets 215,372,464.72
Total purchase cost/disposal
80,808,000.00 23,273,750.00 215,372,464.72
consideration
Less: The net asset share of a
subsidiary calculated according
80,155,835.67 80,992,988.80 89,642,511.67
to the proportion of the equity
acquired/disposed
Difference 652,164.33 57,719,238.80 125,729,953.05
Including: Adjustment of capital
652,164.33 57,719,238.80 125,729,953.05
surplus
Adjusted surplus reserve
Undistributed profits
after adjustment
3. Rights and interests in joint venture arrangements and associated enterprises
(1) Important joint ventures and associated enterprises
None
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(2) Main financial information of important joint ventures
None
(3) Main financial information of important associated enterprises
None
(4) Summary of financial information of unimportant joint ventures and associates
Unit: RMB
Closing balance/amount incurred in Opening balance/amount incurred in
current period previous period
Joint ventures:
The total of the following items calculated
according to the shareholding ratio
Associated enterprises:
Total book value of investment 760,220,882.07 361,008,671.83
The total of the following items calculated
according to the shareholding ratio
—Net profit -28,435,998.08 2,298,237.32
—Other comprehensive income -12,650.40 -15,493,341.86
—Total comprehensive income -28,448,648.48 -13,195,104.54
(5) Statement of important restrictions on the ability of joint ventures or associates to transfer capital to the
Company
None
(6) Excess losses incurred by joint ventures or associated enterprises
None
(7) Unrecognized commitments related to the investment in joint ventures
None
(8) Contingent liabilities related to the investment in joint ventures or associates
None
4. Important joint operation
None
5. Rights and interests in structured entities not included in consolidated financial statements
Explanation of structured entities not recorded in the consolidated financial statements:
None
6. Others
None
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XI. Government Grants
1. Government grants recognized at the end of the reporting period based on amounts receivable
Applicable Not applicable
Reasons for not receiving the projected amount of government grants at the projected time point
Applicable Not applicable
2. Liability items involving government grants
Applicable Not applicable
Unit: RMB
Amount
Amount Other
Amount of new included in
Accounting Opening transferred to changes in Closing Related to
subsidies in non-operating
items balance other income in the current balance assets/income
current period income of the
the current period period
current period
Deferred
532,374,144.38 65,520,570.00 91,341,623.56 36,000.001 506,517,090.82 Asset-related
income
Deferred Income-
13,000,000.00 432,432.48 12,567,567.52
income related
Total 532,374,144.38 78,520,570.00 91,774,056.04 36,000.00 519,084,658.34
Note: 1 Decrease in the current period - Other decrease of RMB 36,000.00 represents payments to project partners after a
transfer to other accounts payable.
3. Government grants recognized in gains and losses for the current period
Applicable Not applicable
Unit: RMB
Accounting items Amount incurred during the period Amount incurred in the previous period
Other income - directly credited 239,774,534.60 185,375,500.06
Other income - transferred from deferred
91,774,056.04 166,008,299.37
income
Total 331,548,590.64 351,383,799.43
XII. Risks Related to Financial Instruments
1. Various risks arising from financial instruments
The major financial instruments of the Group include equity investments, accounts receivable, borrowings and accounts payable, etc.
For details on the financial instruments, please see this Note VII. Relevant Items. Risks related to the financial instruments and the
Group's risk management policy used for reducing these risks is stated as follows. The Group's management manages and monitors
these exposures to ensure that these risks are controlled within a limited scope.
The Group analyzes the reasonableness of risk variables and the impact of potential changes on current loss or profit or shareholder's
equity using sensitivity analysis techniques. As risk variables rarely change in isolation, and the correlation between any two of the
risk variables will have a great effect on the final impact amount of a certain risk variable, the following disclosures are made assuming
that each variable changes in isolation.
(I) Risk management goals and policies
The Group's risk management aims to reach appropriate balancing between risks and benefits, to minimize the negative impact of risks
on the Group's operating results, and to maximize the interests of shareholders and other equity investors. Based on these risk
management goals, the Group's basic strategy for risk management is to determine and analyze various risks faced by the Group,
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establish an appropriate risk tolerance bottom line and conduct risk management, and supervise various risks in a timely and reliable
manner to control the risks within a limited scope.
1. Market risk
(1) Foreign exchange risk
Foreign exchange risk refers to the risk of loss due to exchange rate change. The Group's exposure to foreign exchange mainly involves
US dollars. Except that the Company and its subsidiaries purchase and sell in USD, EUR, JPY, VND, DKK, HKD, TWD and KRW,
other main business of the Group is measured and settled in RMB. As of December 31, 2023, the Company's monetary items in foreign
currencies are detailed in Note VII.67. Except for the assets or liabilities, certain financial assets for trading, certain financial liabilities
for trading, certain investments in other equity instruments, certain other non-current financial assets and certain other non-current
assets described in that table, which are in foreign currencies, the Group's assets and liabilities are mainly in RMB. The foreign
exchange risks arising from the assets and liabilities denominated in foreign currencies may have an impact on the operating results of
the Group.
The Group closely monitors the impact of exchange rate changes on the Group's foreign exchange risks. The Company has large
volume of export sales, and needs to import some raw materials. Some equipment for research, development, production and testing
of the Company also needs to be purchased from abroad. The Company's export sales and imported raw materials are mainly settled in
USD. The depreciation of USD and the appreciation of RMB will reduce the procurement cost of imported raw materials, but adversely
affect the competitiveness of the Company's products in overseas markets. Considering the import of raw materials and export of
products, the appreciation of RMB against USD will affect the Company's profitability to some extent.
Sensitivity analysis over foreign exchange risks:
When other variables remain unchanged, the possible reasonable changes in USD currency rate may have the following effects on
current gains and losses, as well as shareholders' equity:
2023 2022
Change in exchange Impact on Impact on
Item Impact on net profit Impact on net profit
rate shareholders' equity shareholders' equity
(RMB) (RMB)
(RMB) (RMB)
3% appreciation
USD -51,954,213.77 -53,372,215.77 -17,700,129.48 -20,864,011.13
against RMB
3% depreciation
USD 51,954,213.77 53,372,215.77 17,700,129.48 20,864,011.13
against RMB
(2) Interest rate risk - cash flow change risk
The Group's risk of cash flow changes of financial instruments arising from interest rate changes mainly involves floating rate bank
borrowings. At present, the interest rate of the Group's bank borrowings is mainly floating rate.
Interest rate risk sensitivity analysis:
The sensitivity analysis over interest rate risks is conducted based on the following assumptions:
Changes in market interest rates affect the interest income or expense of financial instruments with variable interest rates;
For fixed-rate financial instruments measured at fair value, changes in market interest rates only affect their interest income
or expense;
For derivative financial instruments designated as hedge instruments, changes in market interest rates affect their fair value,
and all interest rate hedging is expected to be highly effective;
Changes in fair values of derivative financial instruments and other financial assets and liabilities are calculated using the
discounted cash flow method at the market interest rate on the balance sheet date.
On the basis of the above assumptions, when other variables remain unchanged, the possible reasonable changes in interest rates may
have the following effects on current gains and losses, as well as shareholders' equity:
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2023 2022
Interest rate Impact on Impact on
Item Impact on net profit Impact on net profit
change shareholders' equity shareholders' equity
(RMB) (RMB)
(RMB) (RMB)
Bank Float up by
-44,382,185.25 -44,186,512.56 -24,185,541.46 -24,185,541.46
borrowings 10%
Bank Float down by
44,382,185.25 44,186,512.56 24,185,541.46 24,185,541.46
borrowings 10%
(3) Other price risks
None
2. Credit risk
As of December 31, 2023, the maximum credit risk exposure that may cause the Group's financial loss resulted from the loss in the
Group's financial assets caused by the counterparty's failure to perform its contractual obligations.
In order to reduce credit risk, the Group sets up a team to determine the credit limit, conduct credit approval, and implement other
monitoring procedures to ensure that necessary measures are taken to recover overdue claims. Additionally, the Company cooperates
with commercial insurance institutions to insure for high-risk clients, so as to reduce the risk of bad debts from credit sale. In addition,
the Group reviews the recovery of each individual receivable on each balance sheet date to ensure that adequate bad debt provision is
made for unrecoverable amounts. Therefore, the Group's management believes that the credit risk undertaken by the Group has been
greatly reduced.
The Group has put in place necessary policies to ensure that all its clients have good credit records.
The Group's non-cash cash at bank and on hand are mainly deposited with financial institutions with good credit. The management
believes that there is no significant credit risk, and it is expected that the default of counterparty will not cause significant losses to the
Group.
(1) There is no overdue and undepreciated amount in the Group's receivables;
(2) The analysis of financial assets with individual impairment involves the judgment on the factors to be considered in the impairment
of the financial assets
None
3. Liquidity risk
When managing liquidity risk, the Group maintains and monitors cash and cash equivalents the management deems sufficient to meet
the Group's business needs and reduce the impact of cash flow fluctuations. The management of the Group monitors the use of bank
borrowings and ensure the compliance with borrowing agreements.
The Group uses bank borrowings and equity instruments as its main sources of funds. As of December 31, 2023, the unused bank credit
line of the Group was RMB 40.933 billion (December 31, 2022: RMB 31.583 billion).
2. Hedging
None
3. Financial assets
(1) Classification by mode of transfer
Applicable Not applicable
(2) Financial assets derecognized due to transfers
Applicable Not applicable
Unit: RMB
Amount of financial assets Gains or losses related to
Item Mode of financial asset transfer
derecognized derecognition
Financing receivables Endorsement by notes 1,509,375.67
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Amount of financial assets Gains or losses related to
Item Mode of financial asset transfer
derecognized derecognition
Total 1,509,375.67
(3) Financial assets resulting from ongoing involvement in asset transfers
Applicable Not applicable
Unit: RMB
Amount of assets from Amount of liabilities from
Item Mode of asset transfer
continued involvement continued involvement
Notes receivable Discounted notes 100,000,000.00 100,000,000.00
Accounts receivable Factoring with recourse 75,000,000.00 75,000,000.00
Total 175,000,000.00 175,000,000.00
XIII. Disclosure of Fair Value
1. The ending fair value of assets and liabilities measured at fair value
Unit: RMB
Fair value of closing
Item The first level of fair The second level of fair The third level of fair
Total
value measurement value measurement value measurement
I. Continuous fair value
- - - -
measurement
(I) Financial assets held
43,356,500.16 104,229,894.43 439,858,697.10 587,445,091.69
for trading
1. Financial assets
measured at fair value 43,356,500.16 104,229,894.43 439,858,697.10 587,445,091.69
through profit and loss
(1) Debt instrument
3,053,700.00 3,053,700.00
investment
(2) Equity instrument
43,356,500.16 436,804,997.10 480,161,497.26
investment
(3) Derivative financial
104,229,894.43 104,229,894.43
assets
(II) Investment in other
591,269,883.71 591,269,883.71
equity instruments
(III) Accounts receivable
9,059,230.11 9,059,230.11
financing
(IV) Other non-current
322,640,244.40 322,640,244.40
financial assets
Total assets consistently
43,356,500.16 104,229,894.43 1,362,828,055.32 1,510,414,449.91
measured at fair value
(5) Financial liabilities
129,579,785.95 129,579,785.95
held for trading
Derivative
129,579,785.95 129,579,785.95
financial liabilities
Total liabilities
continuously measured at 129,579,785.95 129,579,785.95
fair value
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Fair value of closing
Item The first level of fair The second level of fair The third level of fair
Total
value measurement value measurement value measurement
II. Non-continuous fair
- - - -
value measurement
2. Determination basis for the market price of continuous and non-continuous first-level fair value
measurement items
The closing price at the end of the year is used as the basis for determining the market price of the shares of foreign listed companies
held by the Company.
3. Qualitative and quantitative information on the valuation techniques and important parameters used in
continuous and non-continuous second-level fair value measurement items
Directly or indirectly observable input values of related assets or liabilities except first-level inputs.
4. Qualitative and quantitative information on the valuation techniques and important parameters used in
continuous and non-continuous third-level fair value measurement items
Basis for determining fair value according to the value assessed under the income method and the asset-based method and the net book
asset.
5. Adjustment information and sensitivity analysis of non-observable parameters between beginning and
closing book value for continuous third-level fair value measurement items
None
6. Conversion among different levels in the current period, reasons for conversion and the policy for
determining conversion time points in continuous fair value measurement items,
None
7. Changes in valuation techniques during the current period and reasons for changes
None
8. Fair value of financial assets and financial liabilities not measured at fair value
None
9. Others
None
XIV. Related Parties and Related Transactions
1. Information about the parent company of the Company
Proportion of
Shareholding ratio
voting rights of the
Parent company name Registration place Business nature Registered capital of the Company to
Company in the
the Company
Company
Equity investment
Goertek Group Co., Ltd. Weifang RMB 100 million 14.84% 14.84%
management, etc.
Explanation of the parent company of the Company
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The Company's parent company and final parent company is Goertek Group Co., Ltd.
The final controller of the Company is Goertek Group Co., Ltd.
2. Information on subsidiaries of the Company
For details of the Company's subsidiaries, please see Note X.1. "Interests in Subsidiaries".
3. Information on joint ventures and associated enterprises of the Company
For details of significant joint ventures or associates of the Company, please see Note X.3. "Interests in Joint Venture Arrangements
or Associated Enterprises".
Other joint ventures or associates with which the Company has entered into related-party transactions during the current period, or
with which the Company has entered into related-party transactions in prior periods, resulting in balances, are summarized as
follows:
None
4. Information on other related parties
Name of other related parties Relationship between other related parties and the Company
Jiang Bin Actual controller and chairman of board of the Company
Hu Shuangmei Actual controller
Goertek Robotics Co., Ltd. Business of the same actual controller
Weifang Goer Farm Co., Ltd. Business of the same actual controller
Weifang Goer Manor Trading Co., Ltd. Business of the same actual controller
Weifang Goer Manor Food & Beverage Co., Ltd. Business of the same actual controller
Weifang Goer Property Service Co., Ltd. Business of the same actual controller
Weifang Point Hotel Management Co., Ltd. Business of the same actual controller
Weihai Goer Ecological Agriculture Co., Ltd. Business of the same actual controller
Dotcom Investment Co., Ltd. Enterprise controlled by an affiliated natural person
Beijing Bubble Lab Co., Ltd. Enterprise controlled by an affiliated natural person
Weifang Daozao Catering Company Co., Ltd. Business of the same actual controller in the past 12 months
Weifang Goer Real Estate Co., Ltd. Business of the same actual controller
Weifang Dotcom Catering Management Co., Ltd. Enterprise controlled by an affiliated natural person
Qingdao Dotcom Catering Management Co., Ltd. Enterprise controlled by an affiliated natural person
Bei Ge (Weifang) Intelligent technology Co., Ltd Business of the same actual controller
Weifang Goer School Business of the same actual controller
Shandong Goer Education Group Co., Ltd. Business of the same actual controller
Weifang High-Tech Zone Yasong Linju Kindergarten Business of the same actual controller
Weifang High-Tech Zone Zhuohe Kindergarten Business of the same actual controller
Dynaudio (Shanghai) Co., Ltd. Enterprise controlled by an affiliated natural person
Goerdyna Holding A/S Enterprise controlled by an affiliated natural person
Qingdao Point Hotel Management Co., Ltd. Business of the same actual controller
Wemake (Weihai) Digital Creative Technology Co., Ltd. Business of the same actual controller
Wemake (Qingdao) Digital Creative Technology Co., Ltd. Business of the same actual controller
Goerlife Co., Ltd. Business of the same actual controller
Weihai Point Hotel Management Co., Ltd. Business of the same actual controller
Weifang Goerdyna Technology Co., Ltd. Enterprise controlled by an affiliated natural person
Shenzhen Goerdyna Technology Co., Ltd. Enterprise controlled by an affiliated natural person
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Name of other related parties Relationship between other related parties and the Company
GoerDyna Technology Co., Ltd. Enterprise controlled by an affiliated natural person
Business of the same actual controller, de-registered in
Beijing Xiaoniao Tingting Technology Co., Ltd
December 2022
Wemake (Beijing) Digital Creative Technology Co., Ltd. Business of the same actual controller
Weifang Dotcom Garden Floriculture Co., Ltd Enterprise controlled by an affiliated natural person
Little Bird Co., Ltd Enterprise controlled by an affiliated natural person
Anqiu Wenge Vocational Training School Co., Ltd. Business of the same actual controller
AKM Industrial Company Limited The Company's associate, externally disposed of in July 2022
An enterprise actually controlled by Mr. Liu Chengmin, the
Gongqingcheng Zhuiyuan Phase II Venture Capital Partnership
former director of the Company and a joint investor of
(Limited Partnership)
GravityXR Electronics and Technology Co., Ltd.
An enterprise actually controlled by Mr. Liu Chengmin, the
Shenzhen Zhuiyuan Fortune Investment Partnership (Limited
former director of the Company and a joint investor of
Partnership)
Uphoton Technology (Shaoxing) Co., Ltd.
Jiang Long Person acting in concert with the actual controller
Zhuoguang Xiangrong Technology (Tianjin) Partnership (Limited An entity controlled by affiliated natural persons as managing
Partnership) partners
Other explanations:
Bei Ge (Weifang) Intelligent technology Co., Ltd, formerly known as Beihang Goer (Weifang) Intelligent Robot Co., Ltd.; Goerdyna-
Holding A/S, formerly known as Dynaudio Holding A/S.
5. Related party transactions
(1) Related transactions involving commodity purchase, and rendering and receipt of services
Statement of purchasing goods/accepting labor services
Unit: RMB
Approved Exceed the trading
Related parties Related transactions 2023 2022
trading limit limit or not
AKM Industrial
Purchasing raw materials 45,308,209.26 No 203,633,398.93
Company Limited
Weifang Goer Farm Purchasing goods and
30,152,987.69 No 49,549,859.14
Co., Ltd. services
Weifang Point Hotel Purchasing goods and
18,459,368.72 No 16,117,887.30
Management Co., Ltd. services
Goertek Group Co., Purchasing goods and
10,560,575.44 No 7,040,506.52
Ltd. services
Weifang Goer Manor
Purchasing goods 9,106,065.56 No 8,499,702.97
Trading Co., Ltd.
Weifang Goer Property Purchasing goods and
8,537,213.68 No 8,688,125.52
Service Co., Ltd. services
Qingdao Virtual Reality Purchasing goods and
5,978,660.00 No 11,968,898.11
Institute Co., Ltd. services
Goerlife Co., Ltd. Purchasing goods 5,740,373.09 No
Little Bird Co., Ltd Purchasing goods 3,707,246.20 No 1,023,036.15
Qingdao Point Hotel
Receiving labor service 3,420,930.82 No 4,594,268.33
Management Co., Ltd.
Weifang Goer Manor Purchasing goods 2,722,466.87 No 2,643,410.57
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Approved Exceed the trading
Related parties Related transactions 2023 2022
trading limit limit or not
Food & Beverage Co.,
Ltd.
Dotcom Investment Purchasing goods and
1,961,849.91 No 1,015,175.98
Co., Ltd. services
Weifang Dotcom
Purchasing goods and
Catering Management 1,509,999.78 No 2,752,240.44
services
Co., Ltd.
Weihai Goer Ecological
Purchasing goods 1,278,997.98 No 1,778,882.75
Agriculture Co., Ltd.
Weifang Goerdyna
Purchasing goods 1,164,161.55 No 7,057,138.25
Technology Co., Ltd.
Bei Ge (Weifang)
Purchasing goods and
Intelligent technology 930,387.64 No 3,960,783.47
services
Co., Ltd
Wemake (Qingdao)
Purchasing goods and
Digital Creative 388,732.33 No 74,709.16
services
Technology Co., Ltd.
Wemake (Weihai)
Purchasing goods and
Digital Creative 160,610.11 No 256,136.46
services
Technology Co., Ltd.
Dynaudio (Shanghai)
Purchasing goods 154,867.26 No
Co., Ltd.
Weifang Daozao
Purchasing goods and
Catering Company Co., 90,943.71 No 303,917.60
services
Ltd.
Beijing Bubble Lab Purchasing goods and
77,080.00 No 2,312,197.60
Co., Ltd. services
Weifang Dotcom
Garden Floriculture Purchasing goods 56,865.00 No 17,463.00
Co., Ltd
Qingdao Dotcom
Catering Management Purchasing goods 25,751.20 No 21,818.80
Co., Ltd.
Weihai Point Hotel
Receiving labor service 6,520.00 No 14,876.00
Management Co., Ltd.
Goertek Robotics Co., Purchasing goods and
6,509.43 No 3,722,511.29
Ltd. services
Jiaxing Uphoton
Optoelectronics Purchasing goods 2,982.00 No
Technology Co., Ltd.
Beijing Xiaoniao
Tingting Technology Purchasing goods No 1,768,403.43
Co., Ltd
Weifang Goer School Receiving labor service No 65,140.00
Wemake (Beijing)
Digital Creative Receiving labor service No 61,072.39
Technology Co., Ltd.
221
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Approved Exceed the trading
Related parties Related transactions 2023 2022
trading limit limit or not
Purchasing goods and
Goerdyna Holding A/S No 13,356.22
services
Weifang Goer Real
Receiving labor service No 3,600.00
Estate Co., Ltd.
Statement of sales of goods/rendering of services
Unit: RMB
Related parties Related transactions 2023 2022
Weifang Goerdyna Technology Co., Ltd. Sales of goods and services 69,547,848.39 29,201,690.39
Little Bird Co., Ltd Sales of goods and services 18,577,049.95 11,728,490.03
GoerDyna Technology Co., Ltd. Rendering of service 14,695,747.58
Qingdao Virtual Reality Institute Co.,
Sales of goods and services 2,274,163.05 2,011,217.85
Ltd.
Goertek Group Co., Ltd. Sales of goods and services 1,969,742.55 3,136,184.07
Goertek Robotics Co., Ltd. Sales of goods and services 1,781,327.65 1,535,597.08
Jiaxing Uphoton Optoelectronics
Sales of goods 928,504.68 424,929.60
Technology Co., Ltd.
AKM Industrial Company Limited Sales of goods 806,403.77 7,937,930.55
Goerlife Co., Ltd. Rendering of service 794,500.99
Qingdao Point Hotel Management Co.,
Rendering of service 294,339.63
Ltd.
Dotcom Investment Co., Ltd. Rendering of service 252,283.71
Weifang Dotcom Catering Management
Sales of goods and services 173,954.04 719,821.85
Co., Ltd.
Weifang Goer Manor Trading Co., Ltd. Sales of goods 39,374.10 128,364.96
Bei Ge (Weifang) Intelligent technology
Sales of goods 22,950.00 677,865.74
Co., Ltd
Dynaudio (Shanghai) Co., Ltd. Sales of goods and services 14,908.64 132,629.36
Wemake (Qingdao) Digital Creative
Rendering of service 14,000.00
Technology Co., Ltd.
Goerdyna Holding A/S Sales of goods 933.11 22,683.88
Beijing Xiaoniao Tingting Technology
Sales of goods 8,203,382.90
Co., Ltd
Weifang Goer Farm Co., Ltd. Sales of goods 1,121,814.20
GravityXR Electronics and Technology
Sales of goods 578,775.60
Co., Ltd.
Anqiu Wenge Vocational Training School
Sales of goods 22,641.51
Co., Ltd.
Explanation of related party transactions in purchasing and selling goods, rendering and receiving labor services
The above related transactions with Uphoton Technology (Shaoxing) Co., Ltd. and its subsidiaries represent the amounts of related
operations prior to the date of the business combination.
(2) Related entrusted management/contracting and entrusted management/outsourcing
None
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(3) Information of related lease
The Company acts as the lessor:
Unit: RMB
Lease income recognized in Lease income recognized in
Name of lessee Type of leased assets
current period last period
Weifang Goerdyna Technology Co.,
Building 10,454,141.23 5,489,586.84
Ltd.
Shenzhen Goerdyna Technology Co.,
Building 1,834,855.07
Ltd.
Goerlife Co., Ltd. Building 285,057.26
Weifang High-Tech Zone Yasong Linju
Building 209,885.71 152,190.47
Kindergarten
Bei Ge (Weifang) Intelligent
Building 196,812.00 175,318.29
technology Co., Ltd
Shandong Goer Education Group Co.,
Building 53,175.80
Ltd.
Weifang Point Hotel Management Co.,
Building 52,283.19 317,976.42
Ltd.
Weifang Goer Farm Co., Ltd. Building 51,185.84
Dotcom Investment Co., Ltd. Building 39,633.03 39,633.03
Wemake (Weihai) Digital Creative
Building 39,633.03 28,899.08
Technology Co., Ltd.
Weifang High-Tech Zone Zhuohe
Building 24,000.00
Kindergarten
Goertek Group Co., Ltd. Building 7,217.70 12,735.85
Anqiu Wenge Vocational Training
Building 114,285.71
School Co., Ltd.
Weifang Dotcom Catering
Building 39,633.03
Management Co., Ltd.
The Company acts as the lessee:
Unit: RMB
Variable lease
Rental charges for
payments not Interest
simplified treatment of Increased
Type of included in the expenses
Name of short-term leases and low- Rent paid right-of-use
leased measurement of incurred on lease
lessor value asset leases (if assets
assets lease liabilities (if liabilities
applicable)
applicable)
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Qingdao
Virtual
Reality Equipment 564,889.38 615,087.00 638,325.00 615,087.00
Institute
Co., Ltd.
Goertek
Group Building 293,970.88 224,177.95 224,177.95 668,878.77 7,519.10
Co., Ltd.
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(4) Related guarantees
The Company acts as the guarantor
Unit: RMB
Starting date of Maturity date of Whether the guarantee
Guaranteed party Guarantee amount
guarantee guarantee has been performed fully
Goertek (HongKong) Co.,
70,827,000.00 September 10, 2022 February 5, 2023 Yes
Limited
Goertek (HongKong) Co.,
70,827,000.00 October 20, 2022 February 5, 2023 Yes
Limited
Goertek (HongKong) Co.,
208,939,650.00 May 17, 2022 April 26, 2023 Yes
Limited
Goertek (HongKong) Co.,
145,195,350.00 May 24, 2022 May 4, 2023 Yes
Limited
Goertek Technology Vina
912,892,836.92 April 1, 2023 December 15, 2026 No
Company Limited
Goertek Precision Industry
680,714,663.08 April 1, 2023 December 15, 2026 No
Vietnam Company Limited
Goertek Technology Vina
11,732,000.00 June 22, 2022 June 21, 2023 Yes
Company Limited
Goertek Technology Vina
1,080,000.00 June 22, 2022 June 21, 2023 Yes
Company Limited
Weifang Goertek
3,000,000.00 May 12, 2022 May 11, 2023 Yes
Microelectronics Co., Ltd.
Rongcheng Goertek
3,000,000.00 May 12, 2022 May 11, 2023 Yes
Microelectronics Co., Ltd.
Goertek Microelectronics Inc. 21,248,100.00 November 18, 2022 November 17, 2023 Yes
Qingdao Goertek Horizons
5,000,000.00 July 6, 2023 July 5, 2024 No
Technology Co., Ltd
Goertek Technology Vina
49,074,441.78 September 1, 2023 August 30, 2024 No
Company Limited
Goertek Microelectronics Inc. 10,624,050.00 November 16, 2023 November 15, 2024 No
The Company acts as the guaranteed party
Unit: RMB
Whether the guarantee
Starting date of Maturity date of
Guarantor Guarantee amount has been performed
guarantee guarantee
fully
Goertek Group Co., Ltd. 198,315,600.00 February 28, 2023 August 27, 2023 Yes
Goertek Group Co., Ltd. 200,000,000.00 March 29, 2022 March 29, 2027 No
Goertek Group Co., Ltd. 200,000,000.00 June 24, 2022 March 29, 2027 No
Goertek Group Co., Ltd. 20,000,000.00 July 19, 2022 January 19, 2023 Yes
Goertek Group Co., Ltd. 200,000,000.00 July 29, 2022 July 28, 2025 No
Goertek Group Co., Ltd. 500,000,000.00 September 19, 2022 September 19, 2025 No
Goertek Group Co., Ltd. 100,000,000.00 January 11, 2023 August 11, 2023 Yes
Goertek Group Co., Ltd. 140,000,000.00 March 17, 2023 September 17, 2023 Yes
Goertek Group Co., Ltd. 30,000,000.00 June 9, 2023 December 8, 2023 Yes
Goertek Group Co., Ltd. 50,000,000.00 October 26, 2023 November 23, 2023 Yes
Goertek Group Co., Ltd. 191,232,900.00 December 11, 2023 June 10, 2024 No
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Goertek Group Co., Ltd. 600,000,000.00 November 20, 2023 November 16, 2028 No
Goertek Group Co., Ltd. 30,000,000.00 December 27, 2023 February 22, 2024 No
Goertek Group Co., Ltd. 35,000,000.00 September 2, 2022 May 31, 2023 Yes
Goertek Group Co., Ltd. 9,000,000.00 March 23, 2022 May 31, 2023 Yes
Goertek Group Co., Ltd. 2,500,000.00 March 23, 2022 May 31, 2023 Yes
Goertek Group Co., Ltd. 279,058,380.00 September 2, 2022 July 31, 2023 Yes
Goertek Group Co., Ltd. 130,000,000.00 September 2, 2022 May 31, 2023 Yes
Goertek Group Co., Ltd. 50,000,000.00 September 2, 2022 May 31, 2023 Yes
Goertek Group Co., Ltd. 26,000,000.00 September 2, 2022 May 31, 2023 Yes
Goertek Group Co., Ltd. 252,000,000.00 June 1, 2023 May 31, 2024 No
Goertek Group Co., Ltd. 12,000,000.00 June 14, 2023 May 31, 2024 No
Goertek Group Co., Ltd. 50,000,000.00 September 6, 2023 September 5, 2024 No
Goertek Group Co., Ltd. 601,264,228.43 July 31, 2023 July 30, 2024 No
Explanation of related guarantee
None
(5) Funds borrowed from related parties
Unit: RMB
Related parties Amount of borrowing Start date Due date Explanation
Borrowing
Interest rate of 3.45%
per annum, and interest
Goertek Group Co., Ltd. 11,000,000.00 November 15, 2023 November 14, 2026
for the current period
of RMB 49,545.83
Lending
(6) Transfer of assets and debt restructuring of related parties
Unit: RMB
Related parties Related transactions 2023 2022
Weifang Goer Farm Co., Ltd. Purchasing fixed assets, etc. 6,508,282.21 3,453,438.60
Bei Ge (Weifang) Intelligent technology Co., Ltd Purchasing fixed assets, etc. 3,559,740.00
Wemake (Weihai) Digital Creative Technology
Purchasing fixed assets, etc. 2,607,860.92 9,513,110.31
Co., Ltd.
Goertek Group Co., Ltd. Purchasing fixed assets, etc. 466,429.41 1,175,396.00
Weifang Point Hotel Management Co., Ltd. Disposal of fixed assets 72,902.23
Weifang Goerdyna Technology Co., Ltd. Disposal of fixed assets 12,574.24 6,676,812.63
Weifang Dotcom Catering Management Co., Ltd. Purchasing fixed assets, etc. 7,281.42
Weifang Goer Farm Co., Ltd. Disposal of fixed assets 5,270.97
Weifang Goer Real Estate Co., Ltd. Purchasing fixed assets, etc. 27,820,895.00
Qingdao Virtual Reality Institute Co., Ltd. Purchasing fixed assets, etc. 1,314,599.09
Beijing Bubble Lab Co., Ltd. Purchasing fixed assets, etc. 592,444.40
Dynaudio (Shanghai) Co., Ltd. Purchasing fixed assets, etc. 492,566.37
Goertek Group Co., Ltd. Disposal of fixed assets 249,760.94
Qingdao Virtual Reality Institute Co., Ltd. Disposal of fixed assets 2,646.30
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Wemake (Weihai) Digital Creative Technology
Disposal of fixed assets 478.33
Co., Ltd.
(7) Remuneration of key management
Unit: RMB
Item 2023 2022
Remuneration of key management 14,754,040.68 16,911,750.00
The remuneration for the aforementioned key management includes compensation received by related individuals, other than directors,
supervisors, or senior managers, who serve in the Company or its subsidiaries and receive remuneration based on their actual positions
or contracts they have entered into.
(8) Other related transactions
Item Related transactions Amount of current period Amount in previous period
Jiang Long Purchase of equity 23,273,750.00
Shareholder of Uphoton
Technology (Shaoxing) Co.,
Purchase of equity 12,267,043.01
Ltd., a related party of the
Company
Uphoton Technology
Equity investment 200,000,000.00
(Shaoxing) Co., Ltd.
GravityXR Electronics and
Equity investment 90,000,000.00
Technology Co., Ltd.
GoerDyna Technology Co.,
Equity transfer 1,397,700.00
Ltd.
Jiang Bin Capital increase to subsidiaries 64,290,000.00
Jiang Long Capital increase to subsidiaries 64,290,000.00
Goertek Group Co., Ltd. Capital increase to subsidiaries 64,000,000.00
Zhuoguang Xiangrong
Technology (Tianjin)
Capital increase to subsidiaries 60,200,000.00
Partnership (Limited
Partnership)
6. Receivables and payables of related parties
(1) Items with accounts receivable
Unit: RMB
Closing balance Opening balance
Name of project Related parties Bad-debt
Book balance Bad-debt provision Book balance
provision
Accounts Weifang Goerdyna
19,811,361.10 198,113.61 10,399,970.66 103,999.71
receivable Technology Co., Ltd.
Accounts
Little Bird Co., Ltd 4,517,594.90 45,175.95 2,181,873.05 21,818.73
receivable
Accounts GoerDyna Technology
1,570,053.86 15,700.54
receivable Co., Ltd.
Accounts Goertek Robotics Co., 836,487.15 8,364.87 186,792.73 1,867.93
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Closing balance Opening balance
Name of project Related parties Bad-debt
Book balance Bad-debt provision Book balance
provision
receivable Ltd.
Accounts Goertek Group Co.,
345,666.71 3,456.67 104,206.00 1,042.06
receivable Ltd.
Accounts Dotcom Investment
251,597.26 2,515.97
receivable Co., Ltd.
Accounts
Goerlife Co., Ltd. 123,888.38 1,238.88
receivable
Weifang High-Tech
Accounts
Zone Yasong Linju 86,400.00 864.00 4,500.00 45.00
receivable
Kindergarten
Bei Ge (Weifang)
Accounts
Intelligent technology 25,933.50 259.34
receivable
Co., Ltd
Accounts Weifang Goer Farm
1,636.00 16.36
receivable Co., Ltd.
Shandong Goer
Accounts
Education Group Co., 1,064.00 10.64
receivable
Ltd.
Accounts AKM Industrial
466,054.46 4,660.54
receivable Company Limited
Weifang Dotcom
Accounts
Catering Management 81,198.36 811.98
receivable
Co., Ltd.
Jiaxing Uphoton
Accounts
Optoelectronics 30,460.37 304.60
receivable
Technology Co., Ltd.
Accounts Weifang Goer Manor
17,614.54 176.15
receivable Trading Co., Ltd.
(2) Items with accounts payable
Unit: RMB
Name of project Related parties Closing book balance Opening book balance
Accounts payable Qingdao Virtual Reality Institute Co., Ltd. 1,980,142.50 6,797,327.04
Accounts payable Weifang Goer Farm Co., Ltd. 1,584,580.35 640,072.69
Accounts payable Wemake (Weihai) Digital Creative Technology Co., Ltd. 1,380,241.71
Accounts payable Little Bird Co., Ltd 931,430.20 360,559.97
Accounts payable Goertek Group Co., Ltd. 641,304.60 902,885.49
Accounts payable Goerlife Co., Ltd. 615,481.70
Accounts payable Dotcom Investment Co., Ltd. 163,401.79
Accounts payable Weifang Goerdyna Technology Co., Ltd. 118,359.31 831,553.78
Accounts payable Qingdao Point Hotel Management Co., Ltd. 37,894.08 258,802.92
Accounts payable Weifang Goer Manor Food & Beverage Co., Ltd. 37,573.87 17,707.81
Accounts payable Weifang Point Hotel Management Co., Ltd. 20,181.00 331,842.00
Accounts payable Weifang Dotcom Catering Management Co., Ltd. 9,083.59 237,005.09
Accounts payable Bei Ge (Weifang) Intelligent technology Co., Ltd 7,775.53 28,248.00
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Name of project Related parties Closing book balance Opening book balance
Accounts payable Weihai Goer Ecological Agriculture Co., Ltd. 2,680.00 26,800.00
Accounts payable Beijing Bubble Lab Co., Ltd. 550.00 165,554.34
Accounts payable AKM Industrial Company Limited 48,787,168.95
Accounts payable Dynaudio (Shanghai) Co., Ltd. 556,600.00
Accounts payable Weifang Goer Manor Trading Co., Ltd. 264,603.04
Accounts payable Wemake (Qingdao) Digital Creative Technology Co., Ltd. 172,083.50
Accounts payable Weifang Dotcom Garden Floriculture Co., Ltd 7,296.00
Contract liabilities Little Bird Co., Ltd 24,277.58 33.57
Other payables Weifang Goer Property Service Co., Ltd. 23,623.90
Other payables Weifang Goer Real Estate Co., Ltd. 805.20
Other payables Goertek Group Co., Ltd. 11,000,000.00
Other payables Bei Ge (Weifang) Intelligent technology Co., Ltd 28,248.00
7. Commitment of related parties
None
8. Others
None
XV. Share-based Payment
1. Overview of share-based payment
Applicable Not applicable
Unit: RMB
Exercised in the current Unlocked in the current
Category of Granted in the current period Lapsed in the current period
period period
recipients
Number Amount Number Amount Number Amount Number Amount
Production
42,671,380 33,255,195.58 289,923 6,018,805.24 579,473 9,590,227.74 16,524,607 -12,173,035.04
staff
Sales staff 15,445,890 18,796,143.35 127,588 2,648,735.62 1,521,027 21,640,139.91 5,243,911 -9,801,025.20
Management
160,645,730 273,290,108.07 1,437,055 32,349,397.35 12,139,281 176,540,536.31 30,397,692 -153,878,829.10
staff
R&D staff 81,272,440 68,602,005.94 1,036,409 21,515,844.03 5,996,844 85,331,418.48 36,056,737 -44,791,006.92
Total 300,035,440 393,943,452.94 2,890,975 62,532,782.24 20,236,625 293,102,322.44 88,222,947 -220,643,896.26
Stock options or other equity instruments issued and outstanding at the end of the period
Applicable Not applicable
Stock options issued and outstanding at the end of Other equity instruments issued and outstanding
the period at the end of the period
Category of recipients
Remaining period of the Remaining period of
Range of exercise prices Range of exercise prices
contract the contract
Production staff RMB 14/share, RMB 4 months, 5 months, 8
RMB 1.5/RMB 1
Sales staff 18.37/share, RMB months, 16 months, 17
registered capital, RMB 21 months, 48 months
Management staff 29.03/share, RMB months, 20 months, 28
2/share
R&D staff 34.14/share months, 32 months
Other explanations:
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Other equity instruments issued and outstanding at the end of the period are capital increase equity.
The exercise price of the 2023 Stock Option Incentive Plan is RMB 18.37 per share, with remaining contractual terms of 8, 20 and 32
months;
The exercise price of the 2022 Stock Option Incentive Plan is RMB 34.14 per share, with remaining contractual terms of 5 and 17
months;
The exercise price of the 2021 Stock Option Incentive Plan is RMB 29.03 per share, with a remaining contractual term of 4 months;
The exercise price of the 2020 Stock Option Incentive Plan of Goertek Microelectronics is RMB 14 per share, with remaining
contractual terms of 16 and 28 months;
The exercise price of the capital increase stock option incentive of Goertek Microelectronics is RMB 2/share, with a remaining
contractual term of 21 months;
The exercise price of the capital increase stock option incentive of Goertek Optical Technology Co., Ltd is RMB 1.5/RMB 1 registered
capital, with a remaining contractual term of 48 months.
2. Share-based payment settled with equity
Applicable Not applicable
Unit: RMB
The stock option adopts the BS model, with the closing price
Determination method of the fair value of equity instruments at on the date of the general meeting and the capital increase
the date of grant equity as the appraised value for the Employee Stock
Ownership Plan.
Key parameters for the fair value of equity instruments at the grant
Historical volatility, risk-free rate of return, dividend yield
date
Basis for determining the quantity of equity instruments with
Management's best estimate
vesting
Reason for significant difference in estimation in the current
None
period and estimation in the last period
Accumulative amount of equity-settled share-based payment
2,183,414,129.03
included in capital surplus
Total amount of share-based payment settled with equity in
180,445,664.45
current period
3. Cash-settled payment settled in cash
Applicable Not applicable
4. Share-based payment expense in the current period
Applicable Not applicable
Unit: RMB
Category of recipients Equity-settled share-based payment expense Cash-settled share-based payment expense
Production staff -4,225,352.67
Sales staff 16,712,392.29
Management staff 123,216,341.40
R&D staff 44,742,283.43
Total 180,445,664.45
5. Modification and termination of share-based payment
Due to the substandard performance in 2023 and the failure to meet the exercise conditions for the first exercise period of the 2022
Stock Option Incentive Plan, the Company intends to cancel the corresponding stock options.
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Due to the substandard performance in 2023 and the failure to meet the exercise conditions for the third exercise period of the 2020
Stock Option Incentive Plan, the subsidiary Goertek Microelectronics Inc. has canceled corresponding stock options.
6. Others
None
XVI. Commitments and Contingencies
1. Important commitments
Important commitments on the balance sheet date
None
2. Contingencies
(1) Important contingencies on the balance sheet date
(1) Contingent liabilities arising from pending litigations and arbitrations, and financial impact therefrom
None
(2) Contingent liabilities arising from guarantees of debts provided to other units, and financial impact therefrom
As of the report date, except for the ongoing guarantees provided by the Company to its subsidiaries Goertek Technology Vina
Company Limited, Goertek Precision Industry Vietnam Company Limited, Qingdao Goertek Horizons Technology Co., Ltd, and
Goertek Microelectronics Inc. as specified in Note XIV.5, there are no debt guarantees provided by the Company to other entities.
(3) Contingent liabilities related to the investment in joint ventures or associates
None
(4) Other contingent liabilities and financial impact therefrom
None
(2) The Company shall make a statement even if it does not have important contingencies to be disclosed
There are no important contingencies to be disclosed in the Company.
3. Others
None
XVII. Matters after Balance Sheet Date
1. Important non-adjustment matters
None
2. Profit distribution
Dividend to be distributed per 10 shares (RMB) 1.00
Dividend shares to be distributed per 10 shares (shares)
Conversion of capital surplus into share capital per 10 shares
(shares)
Dividend per 10 shares declared after deliberation and approval
1.00
(RMB)
Dividend shares per 10 shares declared after deliberation and
approval (shares)
Conversion of capital surplus into share capital per 10 shares
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declared after deliberation and approval (shares)
Based on the total share capital registered on the record date of
equity distribution minus the repurchased shares in the
Company's specific securities repurchase account, the
Profit distribution plan Company will distribute cash dividend of RMB 1.00 (tax
inclusive) for every 10 shares to all the shareholders, as well as
0 bonus shares (tax inclusive), and there is no conversion of
capital surplus into share capital.
3. Sales return
None
4. Explanation of other matters after the balance sheet date
None
XVIII. Other Important Matters
1. Correction of early accounting errors
None
2. Debt restructuring
None
3. Asset replacement
None
4. Annuity plan
None
5. Discontinued operation
None
6. Division information
(1) Basis for determining reporting divisions and accounting policies
None
(2) Financial information of reporting divisions
None
(3) If the Company does not have any reporting division, or if it cannot disclose the total assets and
liabilities of each reporting division, the reasons shall be stated.
The Group determines its operating divisions on the basis of its internal organizational structure, management requirements and internal
reporting system, and determines its reporting divisions and discloses division information on the basis of its operating divisions.
An operating division is a component of the Group that meets all of the following conditions: (1) the component generates revenues
and incurs expenses in its day-to-day activities; (2) the management of the Group is able to evaluate the operating results of the
component on a regular basis in order to decide on the allocation of resources to the component and to evaluate its performance; and
(3) the Group is able to obtain the component's relevant accounting information, such as its financial position, results of operations,
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and cash flows. Two or more operating divisions are combined into one operating division if they have similar economic characteristics
and if certain conditions are met.
No division information is presented as over 90.00% of the Group's revenues and results are derived from the electronic products
business.
(4) Explanation of other matters:
None
7. Other important transactions and matters that have an impact on investors' decisions
None
8. Others
None
XIX. Notes to Major Items in the Financial Statements of the Parent Company
1. Accounts receivable
(1) Disclosed by age of accounts receivable
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (including 1 year) 6,620,847,221.89 8,896,875,781.94
1 to 2 years 826,365.28
2 to 3 years 780,660.09
Total 6,621,627,881.98 8,897,702,147.22
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(2) Disclosure by method of bad debt accrual
Unit: RMB
Closing balance Opening balance
Book balance Bad-debt provision Book balance Bad-debt provision
Category
Proportion Book value Proportion Book value
Amount Proportion Amount Amount Proportion Amount
of accrual of accrual
Accounts
receivable with
bad debts 6,621,627,881.98 100.00% 22,926,746.45 0.35% 6,598,701,135.53 8,897,702,147.22 100.00% 27,102,669.02 0.30% 8,870,599,478.20
provision by
group
Including:
Group by aging 2,254,422,300.81 34.05% 22,926,746.45 1.02% 2,231,495,554.36 2,686,302,309.44 30.19% 27,102,669.02 1.01% 2,659,199,640.42
Related party
4,367,205,581.17 65.95% 4,367,205,581.17 6,211,399,837.78 69.81% 6,211,399,837.78
group
Total 6,621,627,881.98 100.00% 22,926,746.45 0.35% 6,598,701,135.53 8,897,702,147.22 100.00% 27,102,669.02 0.30% 8,870,599,478.20
Bad debt reserve grouping: Group by aging
Unit: RMB
Closing balance
Name
Book balance Bad-debt provision Proportion of accrual
Within 1 year 2,253,641,640.72 22,536,416.40 1.00%
1 to 2 years
2 to 3 years 780,660.09 390,330.05 50.00%
Over 3 years
Total 2,254,422,300.81 22,926,746.45
Description for basis of determining the group:
Please see Note V.12. "Impairment of Financial Assets".
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Bad debt provision grouping: Related party group
Unit: RMB
Closing balance
Name
Book balance Bad-debt provision Proportion of accrual
Within 1 year 4,367,205,581.17
1 to 2 years
2 to 3 years
Over 3 years
Total 4,367,205,581.17
Description for basis of determining the group:
Please see Note V.12. "Impairment of Financial Assets".
If the bad-debt provision for accounts receivable is made in accordance with the general model of expected credit losses:
Applicable Not applicable
(3) Accrual, recovery or reversal of bad debt provision in current period
Provision for bad debts of the current period:
Unit: RMB
Changes in amount of the current period
Category Opening balance Closing balance
Accrual recovery or reversal Write-off Other
Accounts receivable
with bad debts 27,102,669.02 -4,175,922.57 22,926,746.45
provision by group
Total 27,102,669.02 -4,175,922.57 22,926,746.45
Among them, significant information of bad debt provision withdrawn or written back in the current period:
None
(4) Accounts receivable actually written off in current period
None
(5) Accounts receivable and contract assets with the top five closing balances by debtor
Unit: RMB
Closing balance of
bad-debt provision
Proportion of total
Closing balance of for accounts
Closing balance of Closing balance of closing balance of
Company name accounts receivable receivable and
accounts receivable contract assets accounts receivable
and contract assets provision for
and contract assets
impairment of
contract assets
Company 1 1,582,513,609.49 1,582,513,609.49 23.90%
Company 2 1,463,688,410.53 1,463,688,410.53 22.11%
Company 3 1,077,947,952.00 1,077,947,952.00 16.28% 10,779,479.52
Company 4 835,234,187.19 835,234,187.19 12.61%
Company 5 223,956,312.60 223,956,312.60 3.38% 2,239,563.13
Total 5,183,340,471.81 5,183,340,471.81 78.28% 13,019,042.65
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2. Other receivables
Unit: RMB
Item Closing balance Opening balance
Other receivables 5,265,145,730.57 7,549,205,233.13
Total 5,265,145,730.57 7,549,205,233.13
(1) Interest receivable
None
(2) Dividends receivable
None
(3) Other receivables
1) Classification of other receivables by nature of payment
Unit: RMB
Nature of payment Closing book balance Opening book balance
Current account 5,239,987,500.43 7,513,774,764.36
Security deposit 2,244,358.04 5,919,227.94
Withholding and remitting social insurance
23,468,164.65 30,376,964.77
and housing provident fund
Total 5,265,700,023.12 7,550,070,957.07
2) Disclosed by age of accounts receivable
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (including 1 year) 5,135,306,494.91 7,416,585,872.52
1 to 2 years 41,976.80 133,312,317.97
2 to 3 years 130,321,400.00 3,266.41
Over 3 years 30,151.41 169,500.17
3 to 4 years 966.41 69,500.17
4 to 5 years 29,185.00
Over 5 years 100,000.00
Total 5,265,700,023.12 7,550,070,957.07
3) Disclosure by method of bad debt accrual
Bad-debt provisions are made on the basis of the general model of expected credit losses:
Unit: RMB
Stage 1 Stage 2 Stage 3
Lifetime expected credit
Bad-debt provision 12-month expected Lifetime expected credit Total
loss (not credit
credit loss loss (credit impaired)
impaired)
Balance as of January 1,
865,723.94 865,723.94
2023:
Balance as of January 1,
2023 in the current period
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Stage 1 Stage 2 Stage 3
Lifetime expected credit
Bad-debt provision 12-month expected Lifetime expected credit Total
loss (not credit
credit loss loss (credit impaired)
impaired)
- Transferred to Stage 3 -100,000.00 100,000.00
Accrual in the current
-211,431.39 -211,431.39
period
Amount written off in the
100,000.00 100,000.00
current period
Balance as of December
554,292.55 554,292.55
31, 2023:
Basis of classification by stage and percentage of bad-debt provisions
Please see Note V. 11. "Financial Instruments" and 12. "Impairment of Financial Assets" for details.
Significant changes in the book value of changes in the allowances for losses in the current period
Applicable Not applicable
4) Accrual, recovery or reversal of bad debt reserve in current period
Provision for bad debts of the current period:
Unit: RMB
Changes in amount of the current period
Closing
Category Opening balance Recovery or Resale or write-
Accrual Other balance
reversal off
Group by aging 865,723.94 -211,431.39 100,000.00 554,292.55
Total 865,723.94 -211,431.39 100,000.00 554,292.55
Among them, significant amount in bad debt provision written back or withdrawn in the current period:
None
5) Other receivables actually written off in the current period
Unit: RMB
Item Written off amount
Other receivables actually written off 100,000.00
Among them, write-off of other significant receivables:
None
6) Other receivables of the 5 highest closing balance by debtor
Unit: RMB
Ratio in the total
Closing balance of
Company name Nature of payment Closing balance Aging closing balance of
bad debt provision
other receivables
Company 1 Current account 2,107,423,719.35 Within 1 year 40.02%
Company 2 Current account 865,803,426.28 Within 1 year 16.44%
Company 3 Current account 485,800,000.00 Within 1 year 9.22%
Company 4 Current account 344,659,853.53 Within 1 year 6.55%
Company 5 Current account 292,111,000.00 Within 1 year 5.55%
Total 4,095,797,999.16 77.78%
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7) Presented in other receivables due to centralized management of funds
None
8) Other receivables involving government grants
None
9) Other receivables derecognized due to transfer of financial assets
None
10) Amount of assets and liabilities formed by transferring other receivables and continuing to be involved
None
3. Long-term equity investments
Unit: RMB
Closing balance Opening balance
Item Depreciation Depreciation
Book balance Book value Book balance Book value
reserves reserves
Investment in 6,569,063,091.
8,536,527,729.83 8,536,527,729.83 6,569,063,091.12
subsidiaries 12
Investment in
associated
589,873,101.81 589,873,101.81 192,305,163.87 192,305,163.87
businesses and
joint ventures
6,761,368,254.
Total 9,126,400,831.64 9,126,400,831.64 6,761,368,254.99
99
(1) Investment in subsidiaries
Unit: RMB
Opening Increase or decrease in the current period
Closing
balance of
Opening balance Provision Closing balance balance of
Invested entity provision Investment Investment
(book value) for Other (book value) impairment
for addition reduction
impairment provision
impairment
Weifang Goertek
1,488,304,723.26 -7,858,657.26 1,480,446,066.00
Electronics Co., Ltd.
Weifang Goertek
51,546,414.15 -754,885.85 50,791,528.30
Trading Co., Ltd.
Yishui Goertek
30,000,000.00 30,000,000.00
Electronics Co., Ltd.
Yili Precision
338,545,768.13 -754,307.18 337,791,460.95
Manufacturing Co., Ltd.
Goertek Optical
607,050,022.61 -2,312,926.89 604,737,095.72
Technology Co., Ltd
Goertek Technology Co.,
989,713,683.90 -3,860,566.74 985,853,117.16
Ltd.
Beijing Goertek
56,817,642.83 -2,240,829.20 54,576,813.63
Technology Co., Ltd.
Qingdao Goertek
Acoustics Technology 88,947,844.55 88,947,844.55
Co., Ltd.
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Opening Increase or decrease in the current period
Closing
balance of
Opening balance Provision Closing balance balance of
Invested entity provision Investment Investment
(book value) for Other (book value) impairment
for addition reduction
impairment provision
impairment
Shenzhen Goertek
84,637,158.50 -3,590,168.58 81,046,989.92
Technology Co., Ltd.
Shanghai Goertek
29,902,086.64 -772,145.53 29,129,941.11
Technology Co., Ltd.
Nanjing Goertek
50,966,504.86 324,979.34 51,291,484.20
Technology Co., Ltd.
Weifang Lokomo
Precision Industry Co., 51,931,401.90 127,397.00 52,058,798.90
Ltd.
Goertek Investment Co.,
83,000,000.00 1,915,886.26 84,915,886.26
Ltd.
Beijing Goertek
Investment Management 4,335,646.74 786,287.15 5,121,933.89
Co., Ltd.
Dongguan JoyForce
Precision Manufacturing 31,370,980.55 -51,208.67 31,319,771.88
Co., Ltd.
Goertek Vina Co., Ltd 247,634,379.61 247,634,379.61
Goertek Technology
66,743,212.77 66,743,212.77
Korea Co., Ltd.
Goertek Electronics, Inc. 210,826,960.74 -5,888,831.84 204,938,128.90
Goertek Technology
129,098,963.28 129,098,963.28
Taiwan Co., Ltd.
Goertek Technology
134,228,936.73 134,228,936.73
Japan Co., Ltd.
Goertek Seiki
1,024,111.56 1,024,111.56
Technology Co., Ltd.
Goertek Intelligence
355,555,180.68 -670,013.53 354,885,167.15
Technology Co., Ltd.
Goertek
819,445,743.75 23,273,750.00 842,719,493.75
Microelectronics Inc.
Beijing Goertek
Microelectronics Co., 5,053,458.52 5,053,458.52
Ltd.
Qingdao Goertek
Microelectronics
460,436.04 460,436.04
Research Institute Co.,
Ltd.
Qingdao Goertek
Intelligent Sensor Co., 842,096.78 842,096.78
Ltd.
Rongcheng Goertek
Microelectronics Co., 524,895.84 524,895.84
Ltd.
Shanghai Goertek
Microelectronics Co., 2,758,811.23 2,758,811.23
Ltd.
Shenzhen Goertek
Microelectronics Co., 1,206,995.30 1,206,995.30
Ltd.
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Opening Increase or decrease in the current period
Closing
balance of
Opening balance Provision Closing balance balance of
Invested entity provision Investment Investment
(book value) for Other (book value) impairment
for addition reduction
impairment provision
impairment
Weifang Goertek
Microelectronics Co., 17,208,205.72 17,208,205.72
Ltd.
Wuxi Goertek
Microelectronics Co., 940,460.62 940,460.62
Ltd.
Qingdao Goertek
Commercial Factoring 51,774,832.46 -123,078.96 51,651,753.50
Co., Ltd.
Kunshan Goertek
152,443,503.48 65,000,376.95 217,443,880.43
Electronics Co., Ltd
Rongcheng Goertek
104,738,296.56 1,999,919,593.77 2,104,657,890.33
Technology Co., Ltd.
Nanning Goertek
80,233,954.95 -48,406.52 80,185,548.43
Electronics Co., Ltd
Xi'an Goertek Electronic
8,928,624.34 -92,573.04 8,836,051.30
Technology Co., Ltd.
Weifang High-tech Zone
Goertek Education 300,000.00 300,000.00
Center
Qingdao Resonance
Phase I Venture Capital
160,000,000.00 120,000,000.00 280,000,000.00
Fund Partnership
(Limited Partnership)
Qingdao Goertek
Horizons Technology 30,021,151.54 -21,151.54 30,000,000.00
Co., Ltd
Chongqing Goertek Auto
2,600,000.00 2,600,000.00
Technology Co., Ltd.
Total 6,569,063,091.12 2,184,908,519.14 217,443,880.43 8,536,527,729.83
(2) Investment in associated businesses and joint ventures
Unit: RMB
Increase or decrease in the current period
Opening
Recognized Closing
Opening balance of Other Cash Closing
Invested investment Other Provision balance of
balance (book provision Investment Investment comprehensive dividends balance (book
entity gain and loss changes in for Other impairment
value) for addition reduction income or profits value)
under equity equity impairment provision
impairment adjustments declared
method
I. Joint Venture
II. Affiliated enterprises
SeeYA
-
Technology 600,000,000.00 -12,650.40 1,933,461.16 589,873,101.81
12,047,708.95
Corporation
Uphoton
Technology -
192,305,163.87 183,544,068.53 2,201,798.24
(Shaoxing) 10,962,893.58
Co., Ltd.
-
Sub-total 192,305,163.87 600,000,000.00 183,544,068.53 -12,650.40 4,135,259.40 589,873,101.81
23,010,602.53
-
Total 192,305,163.87 600,000,000.00 183,544,068.53 -12,650.40 4,135,259.40 589,873,101.81
23,010,602.53
The recoverable amount is determined as the net of fair value less disposal expenses.
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Applicable Not applicable
The recoverable amount is determined as the present value of the expected future cash flows.
Applicable Not applicable
Reasons for apparent discrepancies between the foregoing information and information used for impairment testing in prior years or
external information
None
Reasons for apparent discrepancies between the information used in the Company's impairment tests in prior years and the actual
situation in the current year
None
(3) Explanation of other matters:
None
4. Operating revenue and cost of sales
Unit: RMB
2023 2022
Item
Revenue Cost of sales Revenue Cost of sales
Main business 20,835,240,359.16 17,348,440,379.48 35,652,094,423.46 32,162,388,871.15
Other business 7,926,650,258.39 6,992,953,710.46 7,325,297,627.45 5,829,646,168.53
Total 28,761,890,617.55 24,341,394,089.94 42,977,392,050.91 37,992,035,039.68
Information about performance obligations:
None
Information about the trading price apportioned to remaining performance obligations:
The amount of revenue corresponding to performance obligations that have been contracted for but not yet fulfilled or not yet completed
at the end of the reporting period is RMB 0.00.
Significant contract changes or significant transaction price adjustments
None
5. Investment income
Unit: RMB
Item 2023 2022
Return on long-term equity investments measured by the equity method -23,010,602.53 -7,694,836.13
Investment income from disposal of long-term equity investments -183,130,911.21 -10,604,892.81
Investment income from disposal of financial assets held for trading 96,188,704.20 9,695,767.32
Dividend income from long-term equity investments of subsidiaries 2,337,367,940.73 645,651,914.62
Investment income from products such as certificates of deposits 74,716,107.04 20,466,167.48
Gains or losses arising from derecognised financial assets at amortised
-313,191.66
cost
Discount losses of financing receivables that meet the conditions for
-2,120,899.52 -833,626.41
derecognition
Other
Total 2,299,697,147.05 656,680,494.07
6. Others
None
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XX. Supplementary Information
1. Statement of non-recurring gains and losses for the current period
Applicable Not applicable
Unit: RMB
Item Amount Explanation
Gains or losses from disposal of non-current
-123,882,680.161 Mainly loss on retirement of fixed assets
assets
Government grants included in the current
gains and losses (except for those that are
closely related to the normal business
Mainly special funds for enterprise
operations of the Company, comply with
331,548,590.64 innovation and development and other
national policy regulations, are enjoyed
government grants
according to established standards, and have
a continuous impact on the Company's
gains and losses)
Gains and losses from changes in the fair
value of financial assets and liabilities, and
from the disposal of financial assets and
liabilities, held by non-financial enterprises, -26,138,756.91
except for effective hedging businesses
related to the normal operating business of
the Company.
Other non-operating income and
expenditures other than those mentioned 28,631,472.04
above
Mainly tax benefits and investment
Other profit and loss items that meet the
66,527,741.91 income from certificates of deposits and
definition of non-recurring profit and loss
other products
Less: Impact of income tax 35,531,401.22
Impact of minority interests (after tax) 13,005,154.29
Total 228,149,812.01 --
Note: 1 "+" in non-recurring profit and loss items denotes gains or income, while "-" denotes losses or expenses.
Details of other profit and loss items that meet the definition of non-recurring profit and loss：
Applicable Not applicable
Mainly tax benefits and investment income from certificates of deposits and other products
Description of defining the non-recurring profit and loss items, which are listed in Explanatory Announcement No. 1 on Information
Disclosure for Companies with Public Offerings of Securities - Non-Recurring Profit and Loss, as recurring profit and loss
Applicable Not applicable
2. Net assets income rate and earnings per share
Earnings per share
Weighted average return on net
Profit during the reporting period Basic earnings per share (RMB Diluted earnings per share
assets
/ share) (RMB / share)
Net profit attributable to
ordinary shareholders of the 3.59% 0.32 0.32
Company
Net profit attributable to 2.84% 0.25 0.25
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ordinary shareholders of the
Company after deducting non-
recurring gains and losses
3. Differences in accounting data under domestic and foreign accounting standards
(1) Differences in net profits and net assets in the financial reports disclosed pursuant to international
accounting standards and Chinese accounting standards at the same time
Applicable Not applicable
(2) Differences in net profits and net assets in the financial reports disclosed pursuant to foreign accounting
standards and Chinese accounting standards at the same time
Applicable Not applicable
(3) Explanation of reasons for differences in accounting data under domestic and foreign accounting
standards; if the data audited by an overseas audit firm is adjusted for differences, the name of the overseas
firm shall be indicated.
4. Others
None
Goertek Inc.
Chairman: Jiang Bin
March 27, 2024
242
